There’s more than a $500 difference. You may recall a similar-sounding, well-publicized program that was a part of the Housing and Economic Recovery Act of 2008. Under that act, the federal government offered first-time homebuyers up to a $7,500 tax credit to be REPAID over 15- years. Under the ARRA, the tax credit has been increased to $8,000, or 10 percent of the purchase price, whichever is less.

So what’s the big deal about $500 extra dollars? Well, that’s not all! The most significant difference is that under the 2009 act, there is no repayment or recapture clause, as long as you stay in the home as your primary residence for three years. To put it another way, the $7,500 was an interest-free loan; the $8,000 is a grant.

Additionally, the 2009 program removes the restriction against residential purchases financed with state and local tax-exempt mortgage revenue bond programs. Ask your REALTOR, who is a real estate professional, if there programs like this are offered in your area.

There is a first time for everything. The Internal Revenue Service (IRS) defines a first-time homebuyer as anyone who has not owned a home as a primary residence in the past three years. Interestingly, owning a non-primary residence does not disqualify you from taking advantage of the credit. For instance, if you own a beach house but your primary residence for the last three years has been an apartment, you are eligible for the first-time buyer credit.

Qualify using MAGI. There are also income requirements based on your modified adjusted gross income (MAGI). If you are single and your MAGI is less than $75,000 per year, you qualify for the full value of the tax credit. The credit for individuals begins phasing out at $75,001 and is unavailable to those whose MAGI exceeds $95,000 per year. Couples whose MAGI is less than $150,000 can take advantage of the full credit, with the phase-out beginning at $150,001 and ending at $170,000.

Not just you, but the property, too. In addition to you qualifying, the property must be one of the following eligible property types: a single-family detached home, a duplex, an attached home like a townhouse or condominium, or a manufactured home, among others.

The clock is ticking. There are time parameters, as well. You must purchase the home between January 1, 2009 and December 1, 2009 and, it must be used as a primary residence.

More good news...there is no application for this credit, and you don’t need to be approved. If you qualify for the credit, simply complete IRS form 5405 and claim the amount on Line 69 of your 1040. The fact that the credit is refundable means that the homebuyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. In other words, if you qualify for the full $8,000 but owe $2,300 to the IRS, you’ll actually get a check in the amount of $5,700.

Also, if you qualify for the tax credit and buy a home in 2009, you can apply the tax credit against your 2008 tax return. If you think this may be to your advantage, I encourage you to consult a tax specialist before you file this April.

If you qualify, go for it. Unfortunately, the program is not going to help everyone. Some people may still have trouble coming up with a down payment. Others earn more than the program allows or live in areas of the country where the cost of living and lack of affordable housing simply make the provision unfeasible. I am certain, though, that many St. Louisans can benefit – homes are just more affordable, on average, here in Missouri than they are nationwide.

If you are on the fence about buying or selling a home, this incentive could be just what you’ve been waiting for.