Initial information about the law is that first time home buyers who purchase a home between this past April and July of 2009 will qualify for a tax credit of as much as $7,500 depending on income.

         All of this information is tentative, but the understanding is that the credit will be 10% of the purchase price up to a max of $7,500.

A home purchased for $70,000 for example would generate a credit of $7,000. 

         Again, a lot of this information is still fresh and tentative, but the reporting is that the tax credit will come off the buyer’s federal income tax bottom line. So, if you owe $8,000 in federal taxes, the $7,500 would come off that and you would owe only $500.

          But, as with all things that sound this good from the government, there is a catch. 

         This tax credit is actually an interest-free loan. The IRS will require you to pay it back at $500 a year for 15 years, or at the time the home is sold.

         But for people on limited budgets, knocking $7,500 of your tax bill after buying a new home can be a big help.

         Again, please understand, a lot of this information is still tentative and has not been set out in formal federal regulations just yet. You should talk with an accountant or financial advisor before buying a home with this big tax credit as a primary factor.

         Stay tuned for more information.