I think most are aware of the $8000 first time homebuyers credit, which is one of the provisions of the new stimulus bill (The American Recovery and Reinvestment Act of 2009).  This credit should encourage first time homebuyers to purchase their first home.   Given the fact that the present economy has created gigantic sale prices on all homes on the market and interest rates are at historical lows, this was already a great time to purchase a home.  Now add the $8000 tax credit and I can't imagine there ever being a better time to take the leap and purchase your dream home!

BELOW IS A BRIEF OUTLINE OF THE REQUIREMENTS TO QUALIFY FOR THIS CREDIT:

• A first time home buyer is defined as someone who has not owned a home in the last three years.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full credit.
• This must be an "arms length transaction".  In other words, you cannot purchase the home from a related party like a spouse, direct ancestor or direct linean descendant (child or grandchild); however, you can still qualify if you purchase a property from siblings, nephew, nieces and others.
• If you are married, both spouses must be first-time homebuyers.
• If more than one unmarried individual is buying the property, the credit can be split among the individuals who qualify.  However, the total credit cannot exceed the $8000 credit.
• The home must be purchased btween January 1, 2009 and December 1, 2009.

The credit amounts to 10% of the purchase price not to exceed $8000.  This credit does not have to be repaid if you continue living in the home as your primary residence for three years.  If you do not live in the home for the full 36 months, you'll have to pay back the credit in the year in which you move.  There are some exceptions so be sure to consult your tax professional.

The $7500 tax credit is still in effect for homebuyers who purchased their homes between April 9, 2008 and December 31, 2008.  This credit amounts to 10% of the purchase price of the moe not to exceed $7,500.  This particular credit iworks like an interest free loan and must be repaid over a 15 year period starting in 2010.  If your home ceases to be your principal place of residence before the 15 years is up, you'll have to repay the balance in the year in which you move.

Click here for more information regarding this credit.

Download and use the latest version of IRS FORM 5405 for the credit.