On November 6, the popular federal tax credit was been extended from November 30 until spring of next year. In an effort to boost the suffering housing economy across the nation, the tax credit grants first time home buyers $8,000, and other repeat home buyers a $6,500 credit. Overall, the government estimates that approximately $11 billion will be spent on the plan.

SouthFloridaRealtySource has put together some easy ways for consumers to understand the package, and questions that are important to understand the answers to.

Who qualifies as a first time home buyer?
•    First time home buyers are those (individuals, married persons or partners) who have not owned a home for the three years prior to their purchase

What is the tax credit all about?
•    First time home buyers get up to $8,000, or 10 percent of the purchase price of the home as a tax credit.
•    The new residence must be used as the home buyers principal home for the next three consecutive years, otherwise they cannot claim a tax credit.
•    Taxpayers who do not pay the amount of tax they qualify for, a refund check will come in the mail. For example, if you qualify for a $7,000 credit, but only owe $4,000 in tax, you will get $3,000 back from the IRS.
•    2009 home buyers can claim this credit on their 2008 or 2009 returns. For 2010 home buyers, they can claim credit on their 2009 or 2010 tax returns. This means that if you purchased a home in the spring or summer 2009, you can still qualify.
•    The buyer who claims the tax credit has to use the home as their principal residence
•    The only circumstance where home buyers cannot purchase a home is if they buy from someone related to them: ancestor, descendent, grandparents, parents, children, or grandchildren.

What qualifies as a principal residence?
•    A principal residence is the home you spend the most time in and where your bills are usually sent, among other factors. A principal residence can also be a condo, townhouse, a mobile home or boat – basically any place that has eating, sleeping and toilet facilities

How is the new law different?
•    Now buyers have to have contract secured before May 1, 2010, and the home must be closed on or before June 30, 2010.
•    The home price cannot exceed $800,000.
•    Repeat home buyers are now qualified for a $6,500 tax credit, or up to 10 percent of the home purchase price. They must have lived in their residence for the past five consecutive years.
•    Income limits are now $125,000 to $145,000 for individuals and $225,000 to $245,000 for married couples.
•    Anti-fraud measures have been taken after learning from the first time around. Now, buyers must be 18 years or older and cannot be claimed as a dependent on someone else’s taxes.
•    The buyer who claims the tax credit has to use the home as their principal residence
•    Repeat home buyers cannot purchase a home if they buy from someone related to them: ancestor, descendent, grandparents, parents, children, or grandchildren.

Can I use the credit to purchase an additional home to live in?
•    Currently, this is not clear. The law appears as if this may be feasible, so long as you use the new home as a principal residence.
What if I need the credit to make a downpayment?
•    You can always adjust your current withholding amount on your paychecks to show that you will be using the credit at a later time. However, if you decide to not buy a home, you will owe penalties and interest fees. It is best to consult a tax professional.

Can I get the credit for a lot I already own?
•    Yes, as long as the move in date is on or before June 30, 2010. The purchase date is the same as the date of occupancy.

Can I get the credit for an addition of my current home?
•    No, the credit is only for purchasing a home

Can the military also qualify?
•    Yes, people serving in the military overseas for at least 90 days during 2009 and during the first 120 days of 2010 have an extra year to benefit from the tax credit.

For more information you can visit www.federalhousingtaxcredit.com. If you have any questions about the tax credit or real estate in the South Florida area, contact Roman Pavlik at 305-674-4811 or visit www.southfloridarealtysource.com.