If you missed out on the first-time homebuyer tax credit, do not fret. Congress extended and expended the homebuyer tax credit into 2010. Here are the basic eligibility requirements of the new and improved homebuyer tax credit. 

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First-Time Homebuyer Tax Credit Casts A Broader Net

On November 7, 2009, the Worker, Homeownership and Business Assistance Act (WHBAA) of 2009 was enacted by Congress. This legislation extended the deadline for the first-time homebuyer tax credit through April 30, 2010, and expanded it to include higher income limits and qualified existing homeowners.

Extending previous legislation that allowed first time homebuyer tax credits, the Act is also enabling many who were not previously eligible to participate in the program. Income limits were increased to include a broader homebuyer audience, including existing owners of homes who were previously ineligible to participate.

Five W's of Home Buyer Tax Credit

If you close or sign a binding sales agreement on a home beginning January 1, 2009 through April 30, 2010, you may be eligible for the first-time homebuyer tax credit. For existing homeowners, you may be eligible for the tax credit if you close or sign a binding sales agreement on a replacement principle residence beginning November 7, 2009 through April 30, 2010.

Before you get started on all that, though, you'll need to know the basic five W's - what, when, where, why and how? Okay, the last one isn't exactly a "w," but you'll still want to know about it.

The five W's are answered as follows:

• What is this new Act? The WHBAA is actually an extension of the original first-time homebuyer tax credit enacted through the Housing and Economic Recovery Act (HERA) of 2008. The first version of the first-time homebuyer tax credit required the buyer to pay back the credit over a period of 15 years. The HERA was extended in early 2009 and excluded the requirement to pay back the credit. The new WHBAA doesn't require the credit to be paid back, either.
• When was this Act made effective? The Act was effective on November 7, 2009; however, the effective timeframe that applies to your situation depends on whether you are a first-time homebuyer or are replacing your existing home.
• Where can I find more information about this Act? The IRS outlines details of the tax credit on their website.
• Why would I be interested in this Act? If you are eligible and you buy a home between the required dates, you would receive a hefty credit from your tax return.
• How much is the credit? You will receive up to a maximum of $8,000 if you qualify as a first-time homeowner and up to $6,500 if you qualify and are replacing your existing home.

Facts About Home Buyer Tax Credit Eligibility

There are certain requirements you must meet before you will be eligible for the WHBAA. Not just anyone qualifies. At this point, you're probably scratching your head. Below are several frequently asked questions (FAQs), however, that will assist you in understanding and applying the Act.

• Who is eligible? First-time homebuyers and repeat homebuyers are eligible. As a first-time homebuyer, you must buy a new or resale home during the qualifying time period to be eligible. You need to close on your home anytime between January 1, 2009 and April 30, 2010, or sign a binding sales agreement within that timeframe and close by July 1, 2010. If you are a repeat homebuyer, you need to close anytime between November 7, 2009 and April 30, 2010, or sign a binding sales agreement within that timeframe and close by July 1, 2010.
• What is a first-time homebuyer? You are considered a first-time-homebuyer if you have not owned a principle residence within three years prior to buying your next home.
• What is a replacement homebuyer? You are considered a repeat homebuyer if you have owned and lived in a home as your primary residence for five consecutive years out of the past eight prior to your next home purchase.
• How is the tax credit calculated? The credit is ten percent of the purchase price of the home up to a maximum of $8,000 for first-time homebuyers and up to $6,500 for replacement homebuyers. The amounts are half for married filing separately. Effective November 7, 2009, homes that exceed $800,000 are excluded from eligibility.
• Are there income limits? Yes. Increase income limits are effective November 7, 2009. Single taxpayers are limited to $125,000 and married taxpayers are limited to $225,000. There is a reduced benefit to some who exceed income limitations.
• How can I claim it? You need to complete IRS Form 5405, claim the appropriate amount on your 1040 Form and submit your income tax return to claim the refund.
• Is the tax credit a refund? Yes. If you are eligible for the maximum $8,000 credit and owe $2,000 on your taxes, you will receive $6,000 as a tax refund from the IRS.