There has been much information available about the new homebuyer tax incentive. Many of our trade journals and e-mails have included a review of the policies and terms. There has been less coverage however, in the main stream media. The issue of whether or not prospective buyers fully understand the tax incentives is not as clear. One of the primary roles REALTORS® play in the transaction is the access to information. Although we encourage buyers to consult with their attorneys or tax advisors, we can provide direction and counsel on some of the basics. We encourage you to know some of the facts.

- The 2008 $7,500, repayable credit is increased to $8,000 and the repayment feature is eliminated for 2009 purchasers.

- Credit applies only to first-time homebuyers or non-owners for the last three years.

- Every dollar of the tax credit reduces income taxes by a dollar. If the tax obligation is less than $8,000, eligible purchasers would get a refund.

- There are income restrictions of $75,000 for individuals and $150,000 for married  and filing jointly purchasers. These levels refer to the Adjusted Gross Income. There are phased out limits for higher incomes.

- Properties have to be a "Principal Residence". Meaning that, in general, more than 50% of the time must be spent using that residence.

- There are no pre-purchase authorizations or applications. The claim for the deduction is simply made on the IRS Form 1040 tax return. 

- The tax credit cannot be used for a downpayment.

- Eligible recipients may choose to file an extension until after closing, or amend their filing. Buyers are advised not to file a return with the credit unless the transaction has already closed.