UPDATE AS OF OCTOBER 28, 2009: 

Senators agree to extend tax credit for first-time homebuyers, expanding it to repeat buyers

http://abcnews.go.com/Business/wireStory?id=8940611


A tax credit of up to $8,000 is available for qualified First-Time Home Buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid. 
 

The FIRST-TIME HOME BUYER TAX CREDIT enables buyers who haven't owned a home for at least three years to take a credit against their tax return if they buy a house as their primary residence. 

FAQ ON THE TAX CREDIT

WHO IS ELIGIBLE TO CLAIM THE TAX CREDIT?  First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

HOW IS THE AMOUNT OF THE TAX CREDIT DETERMINED?  The credit is up to 10 percent of the home's purchase price up to a maximum of $8,000.

ARE THERE ANY INCOME LIMITS?  Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

HOW DO I CLAIM THE TAX CREDIT?  Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.


For more information on the tax credit, visit the official website.