U.S. real estate received a big boost from Congress in November of 2009 when President Obama signed into law a five-month extension of the first-time homebuyer tax credit and a new tax credit benefiting existing homebuyers. Here are the 10 most important things to know about the revised credit:

1. New Purchase Deadline Extends Into 2010

The home buyer credit was previously scheduled to expire on Nov. 30, 2009. The new law extends the deal to cover purchases of U.S. principal residences that close by April 30, 2010. However, if a home is under contract on that date, the deadline for closing is extended to June 30, 2010.

2. Existing Homeowners Can Now Qualify

The new law allows a reduced credit for existing homeowners who buy a replacement U.S. principal residence after Nov. 6, 2009. The credit equals the lesser of: (1) $6,500, or (2) 10% of the price of the replacement home, or (3) $3,250 for a buyer who uses married filing separate status. The new existing-homeowner credit is only available for purchases that close after Nov. 6, 2009. To qualify, the buyer must have owned and used the same home as a principal residence for at least five consecutive years during the eight-year period ending on the purchase date for the replacement principal residence. If you’re married, your spouse must pass this test too (whether or not you file jointly).

3. Larger Credits Still Allowed For First-Time Buyers

Before the new law, the home buyer credit was only available to first-time buyers, which means someone who had not owned a U.S. principal residence during the three-year period ending on the purchase date for a home that will serve as the buyer’s new principal residence. If you’re married, both you and your spouse must pass the three-year test (whether or not you file jointly). These first-time home buyer rules still apply for purposes of claiming a larger credit of up to $8,000. Specifically, the credit for a first-time buyer still equals the lesser of: (1) $8,000, or (2) 10% of the home purchase price, or (3) $4,000 if you use married filing separate status.

4. Higher-Income Folks Can Now Qualify

Homebuyers qualify if their income is $125,000 or less for an individual, or $225,000 for a couple. And, the cost of the home being purchased cannot exceed $800,000 to be eligible for the credit.

5. New $800,000 Purchase Price Limit

For purchases after Nov. 6, 2009, the credit can only be claimed for a principal residence that costs $800,000 or less. So if your new home costs $800,001, the credit does not apply. For purchases made in 2010, the homebuyer would be able to claim the credit on their 2009 income tax return.

6. No More Credits For Kids Or Dependents

For purchases after Nov. 6, 2009, the home buyer must be at least 18 years old on the purchase date to qualify for the credit. Also, no credit is allowed for a buyer who can be claimed as a dependent on someone else’s Form 1040 for the year of the purchase. These new rules are intended to shut down the practice of claiming the credit for young buyers who don’t have incomes of their own.

7. New Anti-Fraud Rules

A recent government report said the IRS has already identified over 100,000 returns with potentially fraudulent home buyer credits. To deter fraud, the law also gives the IRS the authority to do greater oversight during the processing of the return claiming this tax credit. For credits claimed on 2009 and 2010 returns, buyers must attach a properly executed real estate settlement sheet to the return.

8. Credits Can Still Be Claimed On Prior-Year Returns

Under the revamped rules, you can still claim the credit for a 2009 purchase on your 2008 return (although you would now generally have to file an amended return to do so). You can also claim the credit for a 2010 purchase on your 2009 Form 1040. This allows you to cash in on the credit sooner rather than later, and it may also allow you to claim a larger credit if your income in the year of purchase is higher than in the preceding year.

9. Repayment Rules

Homebuyers do not have to repay the credit, if the home remains their principal residence for 36 months after they buy the home.

10. Special Rules For Military Service Members

Military personnel who have been deployed overseas for 90 days or more in 2008 or 2009 have an additional year, until April 30, 2011, to claim the homebuyer tax credit. And, the recapture provision does not apply to members of the armed forces or Foreign Service who are on official extended duty.

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