While the new Federal Tax Credit could have been much better, there are a few modifications to this version that are very attractive.

Here are the highlights of the Tax Credit:

• 10% of the sales price with a maximum of $8,000.
• Must write an accepted offer to purchase a home by 04/30/2010 and title must transfer no later than 06/30/2010.
• Buyer can not have owned a home in the last three years to receive the 1st Time Home Buyer's Credit.
• Added Repeat Buyer's credit of up to $6,500.  Must have owned your home as your primary residence for 5 consecutive years in the last 8 years. 
• Repeat Buyer's Program does NOT require you to sell your current home.  You can retain it as a Rental, if you prefer.
• Maximum income is $125,000 for a single purchaser and $250,000 for a couple.
• CAN combine with Housing Finance Authority (HFA) loans (i.e. OHFA Bond).
• NO repayment required as long as the buyer lives in the home for three years.

Now, here is something you may not know.  You can include a qualified purchase on your 2009 tax returns, even if you close in 2010.  You simply file an amended return (*) and you can get the $8,000 (or less) Tax Credit refunded right away instead of waiting to file your 2010 returns in 2011.  If you’re not comfortable with that option, then you can notify your Payroll Dept. to stop all Federal Withholding Taxes until you have reached the amount to which you’re entitled.

What this approach does is develop a strategy to let someone close now using short term gifts/loans from family that will be repaid very quickly.  Family is far more willing to help when they know it is a temporary solution, especially when the interest rate on a standard FHA loan is consistently lower than the Ohio Bond rate, where the State will give you 2.50% of the minimum 3.50% down payment.  Buyers are far more likely to swallow their pride and ask for the help when they know it is only temporary.  This approach will help you turn this Tax Credit into a true stimulus package.  If you're confused, uncertain, resistant, or whatever word you want to use to describe still sitting on the fence (Thanks NAR), I will be happy to talk with you and your family members to help them get off that very uncomfortable fence and into your new home before prices and interest rates go up.

Let me know if I can help.

Thanks.

(*) I am not a CPA nor a Certified Tax Preparer, so I can not actually give tax advice.  I would recommend that you talk with your Tax Professional about your questions, including whether the State will tax you on this money.