Last week Congress voted to extend the $8,000 tax credit for first-time home buyers and expand the bill to include move-up or repeat home buyers. If you’re currently under contract and worried about closing by the November 30 deadline, you’re in the clear. These are the latest revisions and stipulations including income restrictions, credit amounts, purchase price limit, as well as the new filing requirement and revised expiration.

Q Who can take advantage of the newly revised tax credit?

A First-time home buyers defined as individuals or married couples who haven’t owned a principal residence within the past three years. First-time home buyers may have ownership rights in an investment property and will still qualify for the credit provided the property has not been used as their principal residence.

Move-up buyer’s who own their home provided it was used as their principal residence consecutively for five out of the past eight years.

Q How much are the newly revised tax credits?

A First-time home buyers are eligible for 10% of the purchase price of a home with a maximum of an $8,000 tax credit ($4,000 married filing separately); while move-up buyers could claim $6,500 ($3,250 married filing separately) on their federal tax return.

Q What are the revised income restrictions?

A Individuals earning $125,000 and married couple earning $225,000 are the updated income limits. If candidates earn more than the allotted dollar amount, there is a $20,000 phase-out amount. Incomes that fall within those parameters will be eligible for a portion of the tax credit.

Q What is the purchase price limit?

A Purchase price limits have been set at $800,000. Therefore, if the property purchased exceeds this amount the buyer(s) won’t be eligible for the tax credit.

Q What is the Anti-fraud Rule?

A Buyers are required to attach the HUD 1 settlement form (closing statement) to IRS form 5405 when filling their Federal tax return.

Q When do these new rules take effect? Are they retroactive?

A The revised rules are in effect for purchase offers written after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30.)

(**As a side-note, I advise all home buyers to speak with a tax professional and confirm eligibility for the credit prior to making a purchase offer.)