Well, just when we thought it was long out of reach… Congress has voted to not only extend, but expand the $8,000 First-Time Home Buyer Tax Credit through April 30, 2010.

And what does this new and improved product have to offer? Here’s the highlights:

1.  First time homebuyers (defined as those who have NOT owned a primary residence in the previous 3 years), may be eligible for the $8,000 tax credit. (As before, there is a 10% cap, so if the home sales for $70,000, then you would only qualify for $7,000).

      New and Improved:  Not just for first time homebuyers anymore!!!  Current homeowners who have been living in their primary residence consecutively for 5 out of the last 8 years, and are repeat buyers (and buying another primary residence), may be eligible for up to a $6,500 tax credit.  

2.  This new credit becomes effective on homes purchased after November 6, 2009 and before May 1, 2010. Buyers must have binding contracts in place by April 30, 2010 and you must CLOSE on the transaction by June 30, 2010. 

3.  Qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

4.  Now as before, there are income limits. Homebuyers who file as single or head-of-household can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers), if their modified adjusted gross income is less than $125,000. For married couples filing a joint return, the combined income limit is $225,000. If you file as single or head-of-household, and earn between $125,000 and $145,000, or are married and jointly earn between $225,000 and $245,000, you are eligible to receive a partial credit. The credit is not available for single taxpayers whose modified adjusted gross income is greater than $145,000 or married couples with a modified gross adjusted income greater than $245,000.

5.  And how much can you buy? All homes under $800,000 qualify. This not only includes resale homes, but also new construction, townhomes and condominiums, as long as they will be purchased as your primary residence. You CANNOT use the credit on vacation homes or rental property.

6. And the final do’s and don’ts: 

a.     You must live in the home for 3 years or you will have to pay the credit back.

b.    You cannot obtain the home by means of a gift or inheritance.

c.     You cannot obtain the home from a child, spouse, your mother or father.

d.    You must be 18 years of age or older. (This had to be clarified since a 4-year-old recently tried to claim the tax credit – not good!)

e.     To get your credit, fill out IRS Form 5405 and submit your HUD-1 (Settlement Statement) with your tax return.