First-time homebuyers credit, courtesy of the IRS

Part the Housing and Economic Recovery Act of 2008 is a tax credit for those buying a home for the first time. It's not exactly free money for you. Rather, it's a chance to get a $7,500 interest-free loan from Uncle Sam. And you get 15 years to pay it back.

To be eligible, you must meet the following requirements:

  • Be buying your first home (rental properties and vacation homes purchased in the past don't count against you, but if your spouse owned a home before, that does count against you)

  • Purchase the home between April 9, 2008 and July 1, 2009

  • Not have income greater than $75,000 (single) or $150,000 (married)

The credit of $7,500 can be taken by eligible taxpayers on their 2008 or 2009 tax return. A credit is the best type of tax benefit because it reduces your tax liability dollar for dollar, wiping out $7,500 of taxes you otherwise would have paid. And if your tax bill is less than $7,500, you can get the difference refunded to you.

You don't get to keep the money forever, though. You'll have to pay back $500 each year on your tax return, for 15 years. But there's no interest on the $7,500 you received up front, so it's still a good deal. The bottom line is that the government wants to offer up some money for those buying their first homes, and let them pay it back over time.

To find more on new tax laws, click here.

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