Credit is 10% of the purchase price of the home, with a maximum for $3750 for individuals and $7500 for married couples filing jointly.

Principal residence only-no vacation homes or rental properties.

Available only for first-time home buyers or those who have not owned a home in the past three years.

Phased out for modified AGI between $150,000-$170,000 for married joint filers and $75,000-$95,000 for individuals.

Repayment. The credit must be repaid over fifteen years. Within two years of taking the credit, one-fifteenth of the credit amount (or $500 each year for a $7500 credit) must be included as an addition to tax on a taxpayer's 2010 return. This is not an addition to taxable income, but an actual increase in the tax owed for the year. The timing works this way. Repayment begins the second tax year after the year the credit is claimed. So if the credit is claimed in 2008, the repayment begins in 2010. If the credit is claimed in 2009, the repayment begins in 2011.

Procedure. The credit is claimed on new IRS Form 5405, which will be available later this year on the www.irs.gov website. Note that taxpayers purchasing a home in 2008 can claim the credit on their 2009 return or can file an amended return for 2008.

Ouch! If the taxpayer stops using the home as a principal residence or sells the home before the credit is paid back, all installments come due in the year of sale or conversion to another use. That means the entire amount must be repaid on a single year's tax return.

Hint. Taxpayers who claim the credit may want to increase their withholding or estimated payments to cover the yearly additions to tax they face during the repayment period.