The ‘Crazy Complex’ $8,000 Federal Tax Credit.

There is a federal stimulus law for first-time homebuyers that offers $8,000 in tax credit. This credit is better than a deduction because you can get it even if you don't owe taxes. As with most federal things the fine print is so crazy complex that it is hard to figure out. This is unfortunate because if makes it hard for people to take advantage of these great benefits. Don't miss out on this amazing opportunity just because it's complicated.

To qualify for the credit you have to be a first-time homebuyer. The IRS considers you a first-time homebuyer if you (and your spouse, if you're married) have not owned any other home in the past three-years. You also have to purchase your home between April 8, 2008 and Dec. 1, 2009. That means you can still buy a home and qualify for this credit. (Homes for sale) To be considered for the credit the home you purchase needs to be your 'main home'. The IRS defines your 'main home' as "the one you live in most of the time." This can be "A house, houseboat, house trailer, cooperative apartment, condominium or other type of residence" according to the IRS.

The amount you qualify for depends on when you buy the home. The credit for homes purchased in 2008 are different from those purchased in 2009. The maximum tax credit is $7,500 for 2008 and $8,000 for 2009. But that's the maximum. The credit amount is also limited to 10% of the home's purchase price. So if you bought a home for $70,000, the maximum credit amount would be limited to $7,000.

Even though it's called a credit, the credit for 2008 homes is really more like an interest-free loan. You have to repay it over 15 years, without interest, in 15 equal installments. The 2009 credit does NOT have to be repaid unless the you move from that home in the next 3 years.

There are also income limitations. If your adjusted gross income is $75,000 or less ($150,000 if married and filing jointly) you may qualify for the full credit amount. If you make more than that you may still qualify, but not for as much. If your income is $95,000 or more ($170,000 if married and filing jointly) you wont qualify for the tax credit.

Here is a Wall Street Journal Article with more information about the credit.

There are a lot of other opportunities right now for free money to help you buy a home, but you need to know how to get it. I'm here to help you sort through all the jargon and get the home you deserve!