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Getting the first-time homebuyer tax credit

By Jen Haley, producer

NEW YORK (CNN) -- The first-time homebuyer tax credit has been extended to cover sales after November 6, 2009 and in contract by April 30, 2010.

There are income limits --- $125,000 for individuals and $225,000 for couples. You must not have owned a home for three years and the tax credit is applicable only to primary residences.

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You don't have to be a first-time homebuyer to get the tax credit. You can get a credit of up to $6,500 if you're buying a primary home and have owned and lived in a home for five of the last eight years.

If you are in the military and on active duty the April 30, 2010 deadline will be extended for one year.

According to the National Association of Realtors, about 2 million people qualified for this credit in 2009 and another 900,000 will qualify this year.

To claim the first-time homebuyer's tax credit:

  • File Form 5405 with your income tax return
  • Attach a signed HUD-1 to your taxes
  • File by mail, not electronically

Last year you could file for the tax credit electronically but some received their refund before their claim was legitimized causing problems for the IRS. As October, the IRS has identified 160 potential schemes involving individuals who have claimed this credit erroneously.

It's unlikely that this tax credit will be extended again.

Experts say this program helped to boost the sagging housing market as people rushed to take advantage of the credit. 47% of home purchases last year were by first-time buyers with a median age of 30.

Talkback: Are you filing for the first-time homebuyer tax credit? (See comments) To top of page

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