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    The new, improved First-Time Homebuyer Credit

    The American Recovery and Reinvestment Act of 2009, signed into law on Feb. 17, appears to be the mother of all spending bills, with $787 billion going to everything from NASA to healthcare, energy, education, science, infrastructure, and tax relief. It also includes a new, improved First-Time Homebuyer Credit for 2009.

    Anyone who qualifies for the new tax credit will be pleasantly surprised. For taxpayers who took advantage of the 2008 credit by purchasing a home by Dec. 31, the 2009 credit will probably invoke "unfair" responses to their congressional representatives.

    How the credits are the same

    Both the old (2008) and new (2009) credits share the same definition of a "new homebuyer" as someone who hasn't owned a main home in the past three years. Individuals with incomes of more than $75,000 and couples with incomes of more than $150,000 are not eligible for the credit.

    How the credits are different

    The major change is that, unlike the 2008 credit, the 2009 credit doesn't have to be paid back. The old credit was actually a 15-year, tax-free loan that buyers must pay back on their tax returns for the next 15 years. Taxpayers can claim 10 percent of the purchase price up to $8,000, an increase from the maximum $7,500 in 2008.

    The 2008 credit applied to purchases between April 8, 2008, and Dec. 31, 2008, and buyers could claim it on a 2008 or 2009 return—whichever was most convenient or gave the largest credit. The 2009 credit applies to purchases between Jan. 1, 2009, and Nov. 31, 2009, and buyers can claim it on a late-filed or amended 2008 return or on a 2009 return.

    No crossover

    To date, no provision exists for a 2008 home purchase to be eligible for the 2009 "no repayment" credit, and a resale/repurchase would not be eligible because of the three-year provision.

    Some good news

    If you were thinking about buying last year but did not because you were turned off by the credit repayment (as reported to several professional tax preparers), then your time has come.

    Any tax advice contained is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.