The first-time homebuyer credit has been in place since 2009 (I can say that now, it’s 2010) but since the extension in November, it seems there’s still a lot of misinformation out there about the credit.  A few days ago, I talked with a first-time buyer who thought he had to be under contract by December 31 2009.

It might be time to back up and recap:

• A first-time buyer is someone who has not owned a home the past three years.  Married joint filers must BOTH meet the criteria to be eligible.
• You must be UNDER CONTRACT – that means contract is signed and initialed – on a residential property you intend to use as your primary residence, by 11:59pm April 30 2010, and you must close before 11:59pm June 30 2010.
• The maximum credit allowed for a first-time buyer is 10% of the purchase price, UP TO $8000.  Homes priced at more than $800000 are not eligible for any credit (I guess they figure you don’t need the money at that point).
• The credit is deducted directly from your tax liability for the year – if your liability is LESS THAN the credit, you get money refunded to you.
• The tax credit isn’t limited to first-time buyers any longer … current homeowners who have lived in their home for five consecutive years – out of the past eight – are now eligible for up to $6500 in tax credit.
• If you make $145001 or more a year ($245001 or more if filing jointly), you don’t qualify for the credit.

Clear as mud?  The credit had an impact on the housing market in 2009, but I don’t expect we’ll see the same in 2010.  Nevertheless it’s here to stay … at least until the end of June, but don’t expect that it’ll be extended again.