Buy a home and get a tax break!  The homebuyer tax credit has been extended AND expanded!  Up to $8,000 is available for qualified first-time homebuyers purchasing a principle residence now until April 30, 2010.  In addition, Congress expanded the tax law to include a credit up to $6,500 for eligible current homeowners.

The tax credit is still a dollar-for-dollar reduction in the amount of tax a taxpayer owes.  For example, if a first-time homebuyer owed $8,000 in federal income taxes and received the $8,000 tax credit, he/she would owe nothing at all to the IRS for that filing period.  On the other hand, if a taxpayer owed $6,000 in taxes but received the $8,000 tax credit, the taxpayer would receive a refund of $2,000.

Generally, the new law defines a first-time homebuyer as someone who has not owned a principle residence within the three-year period prior to the purchase.  With some exceptions, for married taxpayers, the law applies to either spouse.  A current homeowner is one who has owned a home and used it as his/her principal residence consecutively for 5 of the previous 8 years.

To find out the full eligibility requirements and for specific questions about the tax implications of the credit, please consult a tax professional.

Information courtesy of The Real Estate Professional (March/April 2009) and the National Association of Realtors Government Affairs Division