Late in 2009, Congress passed The Worker, Homeownership and Business Assistance Act of 2009, which extended the First-Time Homebuyer Credit and expanded the credit to apply to more individuals.

Following are some of the key items that individuals should know with respect to the credit:

1. To qualify, you must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010.  This means that second homes and vacation homes do NOT qualify.
2. If you enter into a binding contract by April 30, 2010, you must close escrow on the purchase of the home before June 30, 2010 (this may prove difficult for short-sale and bank-owned properties).
3. For purchases (see above) made in 2010, you have the option of claiming the credit on your either your 2009 or 2010 tax return.  This is great as it allows you to receive the benefit of the credit almost concurrent with the purchase.
4. A reduced credit is now available for residents who have lived in the same principal residence for any five consecutive year period during the preceding eight year period that ended on the date the new home is purchased.  Additionally, to qualify under this provision, the settlement date for the new purchase must be after November 6, 2009.
5. The maximum credit for long-time residents (see #4 above) is $6,500 for married couples filing jointly. For married couples filing separately, the maximum credit for long-time residents is $3,250 each.
6. People with higher incomes can now qualify for the credit.  The new law raises the upper income limits for homes purchased after Nov. 6, 2009.  In order to receive the full credit, taxpayers must have adjusted gross incomes of $125,000, or $225,000 for joint filers.
7. To claim the credit on homes purchased after Nov. 6, 2009, and all home purchases claimed on 2009 tax returns, the newly revised IRS Form 5405 must be used.  This form was revised in December 2009.  Failure to use the proper form may cause the credit to be denied.
8. No credit is available if the purchase price of the home exceeds $800,000.
9. The purchaser must be at least 18 years of age on the date of the purchase. 
10. A dependent of another taxpayer is not eligible to claim the credit, even if over 18 years of age.

As a caution, the IRS has stated that there was much abuse of this credit during 2009 and as a result it plans to be critical of credits claimed on future tax returns.  To protect yourself and obtain the maximum credit for which you may qualify, it is important to consult with a qualified tax professional regarding the credit.