If you’re thinking of buying a new home, I have great news for you! There is now a tax credit available for first time homebuyers. If you are buying a home for the first time, or if you haven’t owned a primary residence in three years prior to buying your qualifying home, you could get a whopping tax credit of up to $7,500.

The rules of this package are established by the U.S. Housing and Economic Recovery Act of 2008. According to the U.S. Internal Revenue Service (IRS), first time homebuyers should begin planning now to take advantage of the new tax credit. This credit won’t last forever. In fact, it applies to home purchases after April 8, 2008 and before July 1, 2009. This benefit will reduce your tax bill or increase your refund, dollar for dollar.

Unfortunately, there is a catch. According to www.irs.gov, an Internal Revenue Service Website, the credit is really more of an interest-free loan. The IRS giveth and the IRS taketh away! The loan is expected to be repaid over the next 15 years. That means the amount of credit you receive will be divided into 15 installments and added to your tax debt for the next 15 years.

It’s okay if you own a vacation home or rental property. Purchase of a second home doesn’t qualify and in order for your new home purchase to be eligible, you must not own a primary home or have owned a primary residence for the past three years. If you build your own home, the purchase date is considered to be the date you move in.

The credit is 10 percent of the purchase price of the home. The most you can claim is $7,500. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more.

There is an income qualification for this tax break. Married couples filing a joint return with a modified adjusted gross income of $150,000 or less can qualify. Other taxpayers must have a modified adjustable gross income of $75,000 or less.

Like everything, there are limitations to this plan. For full details on what those limitations are and how you can qualify, visit the IRS website at www.irs.gov. This may be just the opportunity you’re looking for to get a home and tax relief in the same transaction.