Retirement & Financial Planning Report

First-time homebuyers can claim a tax credit on their 2008 tax return up to $7,500 for purchases after April 8, 2008, and before July 1, 2009. Therefore, if you plan to buy your first home before July, you may want to request an automatic filing extension until October 15 for your 2008 tax return. If your 2008 return already has been filed, you can file an amended return to claim the credit.

Points to keep in mind:

* A tax credit reduces the amount of tax you owe, dollar-for-dollar. If you owe less than $7,500 for 2008, Uncle Sam will send you a check for the difference.

* If you pay less than $75,000 for the home, the tax credit is 10 percent of the purchase price.

* Your 2008 income must be no more than $75,000 ($150,000 for couples) to get the full credit. With slightly higher income, you can get a partial credit.

* To get any credit, you cannot have owned a home used as your principal residence for the three years before the purchase.

* The $7,500 tax you save will have to be repaid, $500 per year, on future tax returns. Repayment will be accelerated if you sell the home. (Congress is considering a bill that would eliminate the repayment requirement.)