On July 26, 2008, without any fanfare, President Bush signed into law the Housing and Economic Recovery Act of 2008. The housing assistance tax act has several provisions of importance to the real estate industry, with the credit for first-time home buyers being perhaps the most important - at least to first-time home buyers. But of course, Congress could not make it simple. Instead, the credit is complicated with records required for perhaps the next 15 years after the credit is taken! According to Richard Czerniawski, CPA, an accountant I have had the pleasure to work with and recommend highly, here is the gist of it. A first-time home buyer (no ownership interest in a principal residence during the 3-year period prior to purchase of the qualifying home) gets a credit of 10% of the purchase price of the home, not to exceed $7,500. However, the credit has to be PAID BACK ratably over the next 15 years when the buyer’s subsequent tax returns are filed. There is no interest charged but already the credit is not what it appears to be. Further, single taxpayers see the credit phased out between the income levels of $75,000 - $95,000 and married couples phase out between $150,000- $170,000. Also, the credit will only apply to qualifying residences bought between April 9, 2008 and June 30, 2009. But a special rule allows the purchases made after Dec. 31, 2008 to be claimed on the taxpayer’s 2008 return (the reporting mechanism for this should be interesting). If you sell the home that qualified for the credit before the 15 year payback period, there are rules for payback at the closing of the sale OR if you convert the residence to a rental property. Now you can see why CPA’s will always be in business!