Q: What has stayed the same:
(1) First time home buyers still get a credit of as much as 10% of the purchase price up to a maximum of $8,000. "First time" means people who haven't owned a principal residence for three years before the purchase.
(2) All taxpayers who claim a credit must use the home as a principal residence for the next three consecutive years.
(3) The credits offer dollar-for -dollar reductions of tax and are refundable (if you owe $3,000 in taxes, you will get a $5,000 REFUND).
(4) Buyers who buy a home in 2009 may claim the credit on either their 2008 or 2009 tax returns and those who buy in 2010 may claim their tax credit in 2009 or 2010.
(5) If you buy from a lineal ancestor or descendent, (parents/grandparents and children or grandchildren) you do not qualify.
Q What has Changed:
(1) You must have a contract in place by May 1, 2010 and close by July 1, 2010.
(2) The price of the house is now capped - no credit for any home over $800,000.
(3) There is now a new tax credit for repeat buyers. If you have lived in your home for 5 consecutive years of the last 8, you can qualify for a tax credit of 10% of the purchase price up to a maximum of $6,500.
(4) Income limits are more generous: for single people, the credits phase out between $125,000 and $145,000 and for married people, between $225,000 and $245,000 of modified or adjusted gross income.
(5) The new law contains "anti-abuse" measures - mainly - you will need to furnish proof of purchase (typically a HUD-1 form showing the details of the transaction).
For more information, go to www.federalhousingtaxcredit.com
SOURCE: "The Lowdown on Home-Buyer Tax Credits" WSJ, 11/12/09