This tax credit is available for a limited time only.

1.  Applies to home purchases after April 8, 2008, and before July 1, 2009.

2.  Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.

3.  Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax they owe.

However, the credit operates much like an interest free loan, because it must be repaid over a 15 year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on the new IRS Form 5405.  This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

This credit could help some people with costs associated with purchasing a new home, but it is really an interest free loan. 

Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit.  This means that first-time home buyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.