If you have been contemplating buying a home, do it now.

Mortgage rates are exceptionally low, it is a buyer's market and the American Recovery and Reinvestment Act of 2009 allows a tax credit of up to $8,000 for qualifying homebuyers purchasing a principal residence on or after Jan. 1, 2009, and before Dec. 1, 2009.

Developers, builders, and Realtors are partnering to educate prospective homebuyers on this program and to create a sense of urgency for the buyer to purchase his or her home sooner than later.

This program is for a limited time and is an excellent, unique opportunity for individuals and families to own a home, many industry specialists say.

Elaine Ford, project manager for Hillwood Residential, says, "The $8,000 tax credit is proving to be a effective, and we have seen a direct increase in traffic and home sales.  A great aspect to this program is the ability for people who have not owned a home in the past three years to qualify as first-time buyer and receive the $8,000 credit.  This credit, in combination with the low interest rates, makes this truly the time to buy a new home."

U.S. Department of Housing and Urban Development (HUD), announced on May 29 that first time buyers using FHA-approved lenders can get an advance on their anticipated tax credit to apply toward the down payment and closing costs of their home."

Like all new laws, this one should be carefully reviewed by a qualified expert.

Here are a few highlights of the rebate law from the National Association of Home Builders and the National Association of Realtors:

Homebuyer tax credit at a glance

• The tax credit is for first-time homebuyers only.  For the tax credit program, the IRS defines a first-time home-buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit is equal to 10 percent of the home's purchase price up to $8,000 maximum.
• The credit is available for homes purchased on or after Jan. 1, 2009, and before Dec. 1, 2009.
• Single taxpayers with incomes up to $95,000 and married couples with incomes up to $170,000 qualify for the tax credit.  See IRS rules for phase-out income levels.

Questions to consider
How do I apply for the credit?
There is no pre-purchase authorization, application, or similar approval process.  All eligible purchases simply claim the credit on their IRS Form 1040 tax return.  The credit will be reflected on a new Form 5405 that will be attached to the 1040.  Form 5405 can be downloaded at www.irs.gov.

Can I get cash flow benefits before I file my 2009 tax return?
Yes.  Any first-time home-buyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments.  Individuals subject to income tax withholding would get an IRS form W-4 from their employer, follow the instructions on the schedules provided and give the complete Form W-4 back to the employer.  In many cases their withholding would decrease and their take-home pay would increase.

I will know there is no repayment required for the $8,000 credit.  Are there any circumstances in which I ever have to repay any of the tax credit to the government?
One situation does require a recapture payment back to the government.  If you claim the credit but then sell the property within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it.  A few exceptions apply.

For additional information on the $8,000 tax credit guidelines, visit www.federalhousingtaxcredit.com.

Adapted from the Dallas Morning News.