The new law sweetens a provision known as the first-time-homebuyer credit. In essence, if you meet certain qualifications, you may be eligible for a tax credit of up to $8,000. You also have a choice of claiming the credit on your federal income tax return for 2008 or 2009.
A credit is typically more valuable than a deduction because it eliminates your taxes on a dollar-for-dollar basis -- and in this case, you may get it even if you don't owe taxes.
But Congress made the homebuyer credit's fine print so devilishly tricky that many Americans are likely to have to pay an expert for help in deciphering it.
"We've had numerous calls because people are confused," says Claudia Hill, the owner of Tax Mam, a tax-services firm in Cupertino, Calif. "The problem is when things are this complicated, many people don't get the benefits that Congress intended for them."
Internal Revenue Service officials recently issued a revised form and instru
ctions. Even so, Nancy Hays of H&R Block describes the credit as "crazy complex."Here are answers from IRS officials and tax advisers to some questions about the credit.Date of purchase is a determining factor
Q: Who can claim the credit?
A: In general, the IRS says you may be eligible if you bought your main home, located in the U.S., after April 8, 2008, and before Dec. 1, 2009, and if you (and your spouse, if you're married) haven't owned any other main home during the three-year period ending on the date of purchase. That means you might be eligible even if you owned a home for many years before that period.
However, there are numerous other qualifications.
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