This tax credit is offered for the purchase of any single-family home (including condos) that is to be used as a primary residence (purchases from close relatives are exempt).

To be eligible, one must be a long-time resident that has lived in the same primary residence for 5 consecutive years within the 8-year period prior to the purchase of the home. The borrower must be 18 years of age or older, and must not be filed as a dependent.

The income limit for this credit is $125,000 for an individual or head-of-household (Form 1040) and $225,000 for those filing a joint return. Income cannot exceed the eligibility cap of $145,000 and $245,000 for individuals and joint returns, respectively.

This credit applies to purchases after November 29, 2009, executed by April 30, 2010. All loans must close by June 30, 2010, with the exception of members of the military, foreign service or intelligence serving outside the U.S. These individuals have one extra year.

The maximum credit is 10 percent of the value of the home purchased, not to exceed $6,500.

If the home were to be sold before three years after the purchase date, the entire amount of the tax credit must be repaid by the borrower. A tax advisor can provide guidance to potential borrowers with regard to their specific needs and circumstances.

This is not a reduction of income tax liability; It's a dollar-for-dollar tax reduction! The purchaser would receive a  refund for any unused amount after tax return is filed.

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Courtesy of Dana Liolios with Bank of Albuquerque at dliolios@bankofalbuquerque.com.