Last July, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. 

The provision applied to homes purchased on or after April 9, 2008 and before July 1, 2009.  Taxpayers receiving this tax credit were required to repay any amount received under this provision back to the government over 15 years in equal installments, or earlier, if the home was sold.  The credit phased out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).

The new Bill now provides for an $8,000 home buyer tax credit for first-time home buyers.  For qualified home purchases in 2009, the legislation:

• Stipulates that the new $8,000 tax credit does not have to be repaid, unlike the tax credit passed in July 2008 
• The credit is available for a principal residence purchased before December 1, 2009 
• The credit can be claimed on either the 2008 or 2009 tax return 
• The taxpayer must live in the residence for 36 months to avoid any recapture 
• The tax credit is refundable or claimable regardless of tax liability 
• Allows tax credit home buyers to participate in the mortgage revenue bond program such as MHDC 
• Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds

For more information, visit www.federalhousingtaxcredit.com.