Confusion about tax credit still prevalent.

An offhand comment from a young lady last week caused us to realize that we have not been complete in our explanations of the Federal housing tax credits. Perhaps we assumed that it was as important to consumers as it is to us.

When asked if she had taken the opportunity to benefit from the tax credit the young lady replied, "I am not that interested since you have to pay it back." She was surprised to learn that the credit is a one-time incentive with no penalty.

At the risk of being redundant then, allow us to explain these tax credits while there is still time to make use of them. First, there are two tax credits. One is for first-time home buyers. A first time buyer is defined as one who has not owned a home within 36 months prior to purchasing a qualified home.

A qualified home is one that is used as a principal residence. This includes individual homes, townhouses and condominiums, manufactured homes and houseboats. You may not purchase the home from a relative.

The tax credit is paid at 10 percent of the purchase price of the home, up to $8,000. In order to qualify for the full credit then, the home must cost at least $80,000. The buyer must have an income that is lower than $125,000. Those earning more than $125,000 may still qualify for a partial credit.

Part of the confusion results from some language that states that the credit is "refundable". This does not mean it is to be paid back to the government, but rather that it is refundable to the home buyer. If a buyer owes $1,000 in income tax, the government will pay off that tax and refund the excess, or $7,000 to the home buyer.

In addition to this first time buyer tax credit the program was expanded to offer $6,500 to existing homeowners. It does not matter if the buyer is buying a more expensive, less expensive or equally expensive home. If you have owned and lived in your current home for at least five consecutive years of the last eight years, you may qualify. This does not apply to second homes, but principal residences only. The amount of the home purchased must be less than $800,000 to qualify for the $6,500 credit.

The rest of the criteria are the same. The credit is equal to 10 percent of the purchase price although for repeat buyers the credit is up to a $6,500 maximum credit.

The home purchased must be under a binding contract by April 30, 2010. The purchase transaction must be completed by June 30, 2010. The homeowner status of both spouses must meet the criteria for either credit. If a first time homebuyer, then both spouses must not have owned a home for the 36 months prior to purchase. If you own a vacation home, you are not considered a first time buyer.

So, in a nutshell, if you own a home and have lived there for five years, you may get $6,500 for a different principal residence you agree to buy before April 30. This money does not have to be repaid.

If you have owned a home before and it has been more than three years since you owned it, or if you have never owned a home, you are considered a first time buyer. First time buyers may be eligible for $8,000 which does not have to be repaid.

For help finding homes, land or commercial real estate, contact a Realtor. Visit www.cdarealtors.com for market statistics, to search for properties, or to find a Realtor to work for you.

Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664 with your questions or commentary.