The American Recovery and Reinvestment Act of 2009 proposes to provide an $8000 tax credit to home buyers who purchase a home in 2009. A home is a principle residence such as a house, condo, or townhouse.

Only first time home buyers are eligible. A first time home buyer is an individual who has not owned a home in the last three years. If married and filing jointly, both spouses must qualify as a first time home buyer.

This temporary credit applies to homes purchased between January 1st, 2009 and December 31st, 2009. The credit is for 10% of the purchase price up to a maximum of $8000. (Therefore any home for $80,000 or more would be eligible for the full $8000.)

The buyer can claim the credit on their 2008 or 2009 tax return to reduce their tax liability. If credit is more than tax liability, a tax refund will be provided.

If the buyer's income is in excess of $75,000 ($150,000 if filing jointly), they may not be eligible or only be partially eligible.

The credit does not have to be repaid if the buyer remains in the home for at least three years.

For more information or to verify currently changing requirements, contact your accountant or the IRS.