Here are the basices....as with most items involving taxes please consult your tax specialist.
The Basics: 2009 First-Time Home Buyer Tax Credit
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009. To qualify as a first-time home buyer the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
WHICH PROPERTIES ARE ELIGIBLE?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single family homes, condos, townhomes, and co-ops.
HOW MUCH WILL THE CREDIT BE?
The maximum allowable credit for home buyers is $8,000. Each home buyer"s tax credit is determined by two factors: The price of the home - the credit is equal to 10% of the purchase price of the home, up to $8,000. The buyer's income - single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 - may receive the maximum tax credit.
IF THE BUYER(S)' INCOME EXCEEDS THESE LIMITS, CAN HE/SHE STILL GET A CREDIT?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income - over $95,000 for singles and over $170,000 for couples are not eligible for the credit.
WILL THE TAX CREDIT NEED TO BE REPAID?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.
TAX CREDIT CAN BE USED ON CLOSING COSTS
FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban development on so-called home buyer tax credit loans that was released recently. Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call recently.
As of 2009 this information is valid.