By Jess Webster

The American Recovery and Reinvestment Act of 2009 includes an amendment to the Internal Revenue Code that allows a first-time home buyer to claim an income tax credit in the amount of 10 percent of the purchase price of any property used as the buyer's principal residence, up to a maximum of $8,000. However, the window for a qualified buyer securing this credit is presently set to expire as of December 1, 2009.

Under the Act, a first-time home buyer is anyone who has not had an ownership interest in a principal residence during the three years prior to the date of purchase of the property. If the home buyer is married, his or her spouse must also qualify in order to claim the credit. The credit cannot be claimed if the home buyer's adjusted gross income is greater than $95,000 (or $170,000 if married filing jointly).

The credit applies to any purchase of a principal residence completed after April 8, 2008, and before December 1, 2009. It can be any property, but the buyer must continue to occupy the property as the buyer's principal residence. Furthermore, the buyer cannot sell the property before the end of 2009. Another requirement is that the property may not be purchased from anyone related to the homebuyer.

There are a number of other requirements, including various restrictions and documenting any gifts that may be made in connection with an acquisition.

For more information see, Treasury Department Touts Expanded Tax Credit for First-Time Homebuyers.

Jess Webster is the managing member of the Mikkelborg firm.  His expertise includes lender representation on HUD loans and other real estate financings.