As you've probably heard, the First Time Homeowner's Tax Credit changed from $7500 to $8000 back in February. This is great news for qualifying Buyers.  Here are 3 important points to remember:

•1. With the old plan, the $7500 had to be paid back over 15 years-or at the sale of the home, whichever came first. This made it essentially an interest-free loan.  The $8000 tax credit does not have to be paid back!

•2. The $8000 is a tax credit, not a tax deduction.  What's the difference? With a tax credit, you actually get the full amount of money-dollar for dollar. For example, if you owe $7000 on your taxes, with the tax credit, you would get $1000 back ($8000 minus the $7000 you owe leaves you with $1000).  With a tax deduction, you take the percentage rate of the tax bracket you happen to be in and multiply it by the $8000.  Whatever that number is, that's  the amount you can subtract from the amount of income tax you owe.  In this example, if you owe $7000 and you are in the 15% tax bracket, you would take 15%of $8000 which is $1,200 and subtract that from the $7000 that you owe.  This leaves you responsible for $5,800. The tax credit is a much better deal!

•3.  Homes that are purchased on or after January 1, 2009 and before December 1, 2009 will be eligible for the $8000 Tax Credit .

For more information about this Buyer incentive, check out the FAQ page here

As you may have heard, the Housing and Economic Recovery Act of 2008 provides a great opportunity for First-Time Home Buyers.  A $7500 Tax Credit is now available from the Federal Government.

To qualify for this credit you must be a first-time home buyer and your purchase must close before July 1, 2009.  The law defines a 1^st time Home Buyer as someone who has not owned a principle residence during the three year period prior to the purchase.  If you are a married couple, and one spouse or the other has owned a residence-you are not eligible.  If you own a rental home or vacation property, that is not used as your principle residence, that will not disqualify you.   

The credit really works like an interest free loan and must be paid back over the next 15 years. If you sell the house before the end of the 15 years you must pay back the balance of the loan at that time.

Click here for other frequently asked questions about the tax credit