A tax credit is subtracted dollar for dollar from the taxes you owe. So if you qualify, you could subtract up to $8,000 from the taxes you have to pay.

For some, who bought a home in 2008, the credit isn't a credit in the truest sense. As spelled out in the Housing and Economic Recovery Act of 2008, it must be repaid in equal installments over 15 years. That makes it more like an interest-free loan.

But the economic stimulus package that President Obama has signed into law eliminates the repayment requirement for purchases made in 2009, through November 30, provided the buyer keeps the home at least three years.

Who qualifies?
To qualify for the first-time home buyer's credit, you can't have owned a home at any time in the three years prior to closing on your home. Your closing date must be from January 1, 2009, to November 30, 2009.

The credit is for up to 10% of the home's purchase price. So if you bought a home for $80,000 or more and fall within income limits, you'd receive the full $8,000.

That means that if you owed the IRS $500 on April 15, you'd get a $7,500 refund. The credit is fully refundable, meaning you get it even if you owe no tax.

You won't get the credit if you earn too much. It isn't available for individuals with modified adjusted gross income (MAGI) of $95,000 or more and married couples filing jointly with MAGI of $170,000 or more.

Partial credit is available to individuals with MAGI of $75,000 to $95,000 and couples with MAGI of $150,000 to $170,000.

Purchases of vacation homes and rental properties aren't eligible.

How do you get it?
If you bought a house in 2008, you claim your credit on your 2008 tax return, which is due by April 15, 2009. To claim the credit, use IRS Form 5405, "First-Time Homebuyer Credit."*

If you buy in 2009, by November 30, you can elect to treat your purchase as if it occurred in 2008 or 2009. That would allow you to choose a more favorable credit amount if your MAGI disqualified you or reduced your credit either year.

For a 2009 purchase, claim your credit on either an original or amended 2008 return or on your 2009 return.

*This article is for educational purposes only. Always consult your tax advisor or CPA.