If those considering a home purchase for the first time needed another reason to feel confident now is a great time to buy, they have one. In addition to the already historically-low interest rates, affordable prices and large supply of homes that currently exists, first time buyers can now receive up to an $8,000 tax credit from the federal government for buying a house.

Through the American Recovery and Reinvestment Act that recently became law, Congress improved upon an existing incentive for first-time buyers. The new tax credit, which applies to purchases of a principal residence made on or after Jan.1, 2009 and before Dec. 1, 2009, was increased to $8,000. In addition, the new credit no longer requires repayment making it a true credit as opposed to an interest free loan.

Homebuyers who never owned a home or haven't owned a home in more than three years, may be eligible to claim all or part of the tax credit based on their income level. Congress will also allow individuals to claim the credit on their 2008 tax return to help put money back in to the economy and provide a more immediately stimulus effect. Individuals who buy a home after April 15 can file an amended tax return to receive the credit in 2009. As with any tax law, individuals should check with a tax advisor to discuss any specifics regarding the use of this provision.

Click Here to download your tax form for the First-Time Home Buyer Credit!

In addition, California has allocated 100,000,000 for tax credits for New Home Purchases.  This tax credit is available for qualified buyers who purchased a qualified residence that has never been occupied on or after March 1, 2009.  The buyer must reside in the new home for a minimum of two years immediately following the purchase date. 

Click Here to find out if you qualify and how to apply for the New Home Credit!