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1. Unlike other credits, the first-time homebuyer credit must be repaid in equal installments ( $ 500/year) over 15 years, essentially making it an interest-free loan from the government for most qualifying homeowners. Repayments start 2 years after the year in which the residence is purchased.

2. “Purchase” as used in this new law occurs when title closes. In addition, homebuyers claiming the credit may not acquire the property from certain related persons, and they must satisfy certain basis rules.

3. The credit phases out for taxpayers with AGI of $ 150,000- $ 170,000 joint/$ 75,000- $95,000 single.”

4. The taxpayer must claim the credit on a 2008 or 2009 tax return. However, a first-time buyer who purchases a principal residence in 2009 after filing a 2008 tax return has the option of filing an amended 2008 return to claim the credit.

5. A “first-time homebuyer” is someone, or spouse, who had no ownership interest in a PRINCIPAL RESIDENCE during the 3-year period before the new home is purchased.

6. Renters who also own a vacation home may qualify for the credit since the 3-year lookback period for owning a home applies only to principal residences.

7. Under the new law, two or more unmarried individuals may purchase a residence and qualify for the creedit, allocated between them as the IRS prescribes, up to a maximum credit totaling $ 7,500.

8. The IRS will disallow the credit if the taxpayer disposes of the residence — OR THE RESIDENCE CEASES TO BE THE PRINCIPAL RESIDENCE –before the close of the tax year for which the credit would be allowed. The IRS will also disallow the credit if the taxpayer is a non-resident alien or is financing using tax-exempt mortgage revenue bonds.

9. If a taxpayer sells or no longer uses the home as his principal residence before repaying the credit (i.e. 17 years after the year of purchase), the unpaid balance becomes due in the year in which the residence is sold or no longer used as the taxpayer’s principal residence. HOWEVER, the amount of recapture credit may not exceed the amount of gain from the sale of the residence to an unrelated party.

10. The credit does not have to be repaid if the taxpayer dies. Special rules also exist for an involuntary conversion, and for a residence transferred in a divorce.

There are 2 other items of interest in this new tax act :

A. PROPERTY TAX DEDUCTION, UP TO $ 500, FOR NON-ITEMIZERS AS INCREASED STANDARD DEDUCTIONS FOR 2008 ONLY.

B. REDUCED HOME SALE EXCLUSION FOR PERIODS THAT THE HOME WAS NOT USED AS THE PRINCIPAL RESIDENCE AFTER 1/1/2009. (Non-qualified use for this computation of allocation of the $250K/$ 500K exclusion does not include any such use before 2009.)