Most everyone has heard about the $8,000 tax credit the federal government is offering to first time home buyers as part of the stimulus package. But you may not know that it is scheduled to end soon – you have to close on your new home before December 1, 2009, which of course means on or before November 30, 2009. (And that’s a Monday. Just image what the attorney’s offices will be like. I wouldn’t even think of setting a closing for that day!)

So realistically you need to find your new home by around the middle of October, as banks are often taking 45 days to close new loans these days.

Some quick points:

• The amount of the tax credit is 10% of the purchase price, up to $8,000. So if your home is $65,000, the tax credit would be $6,500.
• Only first time home buyers are eligible. A first time home buyer is defined here as someone who has not had an interest in a principle residence in the past 3 years.
• Your adjusted gross income (AGI) must be no more that $75,000 for singles and $150,000 for joint filers. The credit is reduced until it is $0 for those making over $95,000 single and $170,000 for joint filers.
• The home must be purchased (generally meaning “closed”) between January 1 and November 30, 2009.
• You can take the tax credit when you file your 2009 returns next April, or you may be able to file an amended 2008 tax return and get it sooner.

The credit does not have to be repaid unless you sell the home within 3 years, and then you must pay the entire amount back with a few exceptions (death, divorce, etc. where special rules apply.) It even applies to new construction if you meet all the criteria.

The National Association of  has published a great pamphlet with lots of details. We’ve added it to our website, and you can download it here.

As always, we welcome your questions and comments.