On November 6, 2009 the government decided to modify and extend the first time home buyer tax credit.  The Worker, Homeownership, and Business Assistance Act of 2009 states that current homeowners and first time home owners are eligible for a tax credit if certain criteria is met.  Here are a few important components of the program that home buyers want to be aware of:

• The tax credit is only for your principal residence.  It cannot be applied to a vacation or second home.
• Buyers must enter into a contract of sale by April 30, 2010 and close the sale of the home before June 30, 2010 to qualify.
• 1st time home buyers can qualify for a tax credit of up to $8,000.
• Repeat home buyers can qualify for a tax credit of up to $6,500.
• The amount of the tax credit depends on the price of the house and is equal to 10% of the home’s purchase price, not to exceed the maximum tax credit amount.  For example, if you are a first time home buyer and purchase a home that is valued at $150,000, 10% of the value of that home is $15,000.  Since the maximum amount of the tax credit is $8,000 this person would potentially qualify for the maximum tax credit of $8,000.
• If you stay in the home for at least three years, then you do not have to repay the tax credit.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
• This is a TAX CREDIT.  If you owe the government $8,001 on your 2009 taxes, but get a credit for being a first time home buyer of $8,000, then you will only owe $1 in taxes for that year.  Therefore, you would get no cash back but you would also NOT owe the government the $8,000 owed before the tax credit was applied.

For more information on how to apply for the tax credit, visit the IRS website.  The IRS website has all of the forms available for download that you will need to fill out and submit to receive your tax refund.  For more information on the how the law has changed or for information on the previous law, visit www.federalhousingtaxcredit.com.  This site is sponsored by the National Association of Home Builder’s and provides some great resources on the federal housing tax credit guidelines.