Home-Buyer Credits

There have been three different (yet similar) home-buyer credits since 2008. The first two were exclusively for first-time home-buyers, but the latest one, in effect for homes purchased after November 6, 2009, expands it to some people who already owned a home.
The first credit, in effect for 2008, was for a maximum of $7,500. It was not a no-strings-attached credit, because those who claimed it have to pay it back at $500 per year additional tax on their tax returns for fifteen years.
The credit that was in effect for most of 2009 was a maximum $8,000 refundable credit for first-time home-buyers only. It does not have to be repaid.
For homes purchased after 11/6/09, the same basic credit is in effect, but if the home is not the buyer's first home purchase, he/she/they may qualify for a $6,500 refundable credit.
(We always throw in the adjective "refundable," because some credits are not refundable, meaning that if you do not have enough tax to use them up, you lose them. In this case, even if you had no tax and bought a home that was your first home, the government would send you a refund check for $8,000.)
The credit is now good until May 1, 2010. For homes purchased in 2010, the credit can be claimed on either the 2010 or the 2009 tax return. So, for people still hoping to get a big refund on their 2009 tax return, if they enter into a binding contract before 5/1/2010, and close by 7/1/2010, they qualify.
The $6,500 credit for non-first-time home-buyers is limited to buyers who lived for a minimum of five of the last eight years in a home they owned.
In any case, the buyers must keep the home, and keep using it for their main home, for at least 36 months to avoid paying back the credit. Also if your income is too high (depending on the purchase date) the credit is reduced or eliminated.
As with any tax matter, there is plenty of complexity. If you have questions you can go to Publication 17 at www.irs.gov, or call me.