* The credit is available to first-time home buyers only. A first-time home buyer is a buyer who has not owned a principal residence during the three-year period prior to the purchase. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
* The maximum credit amount is $7,500.
* The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
* Single taxpayers with Modified Adjusted Gross Income (MAGI) of up to $75,000 and married couples with MAGI of up to $150,000 qualify for the full tax credit. The amount of credit is phased-out as MAGI goes from $75,001 to $95,000 for singles and $150,001 to $170,000 for married couples.
* The tax credit is not really a “credit” – it is actually an interest-free loan that must be repaid over a 15-year period. Be advised - one of the items that will probably be in BO's economic stimulus package is a repeal of the requirement to pay back the credit - so it may end up really being a credit after all.
IRS Notice 2009-12 provides guidance on just how to allocate the credit. According to the notice taxpayers can allocate the credit in any manner they see fit among the eligible purchasers.