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The popular $8,000 First Time Homebuyer Tax Credit has now been extended to April 30, 2010, and expanded to include a $6,500 tax credit for existing homeowners who have been in their cuurrent home five years and decide to buy a new home. There are some little known facts about the tax credit that buyers should be aware of as they embark on their quest to find their dream home.

First, the income limits have been expanded to $125,000 for single taxpayers and $225,00o for joint filers. This means that whether you are single or married, the value of the tax credit is the same. However, spouses who file separately are limited to $4,000 per person. The maximium income limits are not based upon gross income, but adjusted gross income, which is your income after deductions for things like IRA contributions, business or capital losses, and deductions for student loan interest paid. Furthermore, taxpayers can still get a partial credit if their income exceeds the limit based upon the IRs' Modified Adjusted Gross Income formula.

Second, buyers in low priced housing states should be aware that the tax credit is limited to the lesser of 10% of the purchase price, or $8,000. Not an issue for buyers in California, but perhaps an issue for buyers in Mississippi where the average home value is far lower and may be less than the $80,000 required for the maximum tax credit.

If a multi-family property is purchased, the tax credit is limited to 10% of the purchase price of the value of the unit in which the buyer resides. As an example, if a $150,000 duplex is purchased and each unit is of equal size and value, the tax credit will be limited to $7,500, or 10% of the $75,000 value assigned to one half of the duplex.

Buyers who purchase a newly built home should be aware that the effective date is the date the homeowner actually occupies the property, rather than the date of purchase or the date construction starts. This could complicate matters for buyers purchasing at year-end to take advantage of year-end builder close-outs. However, a subsequent buyer does benefit from the fact that their exisitng home does not have to be sold in order to qualify for the tax credit.

Home buyers should also be aware of the residency requirement. For example, if a buyer ceases to use the home as their primary residence within 36 months, the amount of the tax credit claimed is due and payable in full in that year. Therefore, if you move regularly with your job, or decide to turn the property into a rental, you might think twice about claiming the credit.

The Internal revenue Service will continue to provide updates to its site at http://www.irs.gov/newsroom/article/0,,id=187935,00.html so homebuyers can make educated decisions regarding their home purchase. All taxpayers should know that the final decision on whether you qualify for the tax credit rests in the hands of the IRS, so be prepared.