Q:

I'm hearing about an $8,000 first-time home buyer credit that doesn't need to be repaid - is it too good to be true?

A:

It's true. For eligible first-time home buyers who purchased a home after Jan. 1, 2009 and before Dec. 1, 2009, the stimulus bill provides for a refundable credit equal to 10% of the purchase price of the home, up to $8,000.

And, yes, unlike the credit provided last year, this first-time home buyer credit does NOT have to be repaid, unless you sell the home or it no longer is your principal residence within 36 months of purchase.

The Tax Institute has asked the IRS for guidance on how the credit should be claimed on a 2008 tax return until the IRS can update Form 5405 to reflect the increased credit.

Q:

Are there income phaseouts with this first-time home buyer credit?

A:

Yes. The new $8,000 credit begins to phase out for individuals with incomes over $75,000 or married couples with incomes over $150,000 filing jointly.

Q:

But what about those of us who purchased a home in early 2009 and took advantage of the $7,500 credit when we filed on our 2008 federal tax return - are we just out of luck?

A:

No, you can still take advantage of the $8,000 credit if you purchased your home in 2009, but you will have to file an amended return to claim the additional credit, up to $500, to which you're entitled.

You must have purchased your home in 2009, however, to be eligible for the up to $8,000 credit. Homes purchased in 2008 do not qualify.

Q:

I purchased my home in 2008 and was eligible for the $7,500 first-time home buyers' credit, will I still have to repay it?

A:

Unfortunately, yes. Those who purchased homes in 2008 and received the first-time home buyers' credit are still required to repay the credit over a 15-year period, or sooner if they do not continue to live in the home as their principal residence for the full 15 years.