$8000 tax credit is a dollar for dollar but does phase out

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. The credit starts to phase out for single filers income at $75K and for married $150K. The is a tax credit not a tax deduction.

Tax Credit vs. Tax deduction:
Credit is a dollar for dollar reduction in tax liability as a deduction that only saves you a portion.

Phase out examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Qualifications:
Must be a 1st time home buyer, not owned property in 3 years
Home must be a primary residence
Non-resisdent alien not eligible
If sell within 3 years the $8K must be repaid

Those that purchased in 2008 will recieve the $7500 tax credit that is an interest free loan that is not repaid until after 2 years. Than re-paid at $500/year over 15 years. If sell before the credit is repaid any captial gains goes towards the credit, if there is no capital gains than the debt is forgiven.

Why are buyers waiting? The opportunity is here.
Interest rates are still at the all time lows.
http://www.freddiemac.com/pmms/pmms30.htm
Interest rates will begin to increase when inflation comes into play.

People hear rates will go lower. It could happen but you will than be fighting with all the other buyers that decide to enter the market: multiple offer situations, pay more because of the competition with a lower rate but you just gave up what you thought would be a savings by waiting.

Home prices are lower than many of us have ever seen giving many the opportunity they thought they would never have. The homes are out there and money is being loaned.

What a great market we are in!