What you need to know about the housing tax credit

By now, you've probably heard lots of chatter about the first-time home buyers credit. The tax credit was originally part of the American Recovery and Reinvestment Act of 2009 and applied only to first-time homebuyers.

In 2009, bowing to pressure from the real estate community, Congress passed the Worker, Homeownership, and Business Assistance Act, which extended and expanded the credit. The credit now applies to sales from January 1, 2009, through April 30, 2010.

For purposes of the credit, a first-time homebuyer is defined as someone who has not owned a principal residence during the last three years. For married taxpayers, you have to consider the history of both the homebuyer and the homebuyer's spouse. If one spouse is disqualified, neither can claim the credit. This means that, so long as you are considered married (even if you were not married to your spouse for the entirety of the past three years), you do not qualify for the first-time homebuyer credit if your spouse does not qualify.