New Tax Credit Amounts To a Free Loan up to $7,500

·         Home-purchase tax credit created by the new housing bill.

·         Up to a $7,500 credit on federal taxes for 2008 or 2009.

·         Functions like an interest-free loan. Only the principal is paid back over time.

·         Eligibility time is from April 9, 2008, through June 30, 2009.

·         May not have owned a house during the past three years

·         Must close before the end of next June

·         Credit for of up to 10 percent of the purchase price of the property, (up to $7,500).

·         If adjusted gross income exceeds $150,000 ($75,000 if single), credit reduces.

·         Must use the house as their principal residence.

·         Those eligible simply request the credit on their tax return for 2008 or 2009

An example:  An eligible buyer this year that owes the IRS $4,000 on their total 2008 income tax bill, could receive $7,500 tax credit and wipe out everything they owe plus get them a $3,500 refund. The new tax credit is what the government calls "refundable": If their tax bill is less than the credit amount, they get the difference back.

·         Payback starts the second tax year after purchase and continues for up to 15 years.

·         Payback period for the full $7,500 credit would be $500 a year.

·         If the house is sold before the end of the repayment period with no gain on the sale, then no further payback is expected from the proceeds.

·         If there is a net gain, the "recapture" cannot exceed the amount of the gain.

For more information go to the website:  www.federalhousingtaxcredit.com .