Gains from the sale of a principal residence will no longer be excluded from gross income under Code Sec. 121 for periods that the home was not used as the principal residence ("nonqualifying use"). This new income inclusion rule applies to home sales after Dec. 31, 2008, and under is based only on nonqualified use periods that begin on or after Jan. 1, 2009.
Tax Break for First Time Homeowners
First time home buyers may be eligible for a tax credit of $7,500 or 10% of the purchase price. If you earn a modified AGI of more than $75,000 or $150,000 if married and filing a joint tax return, the credit starts to phase out. For single people, it phases out completely at $95,000 of annual income, while for married people filing jointly, it phases out at $170,000. BUT you have to pay back the credit over the next 15 years, in equal amounts each year when you pay your taxes. That makes this more like an interest-free loan than a true credit. The tax credit is retroactive to home purchases on April 9, 2008 and expires on July 1, 2009. If you purchase a home from Jan. 1, 2009 to June 30, 2009, you can claim the tax credit on your 2008 tax return.
Where's My IRS Tax Rebate?
If you're expecting a rebate, the IRS has created a handy online tool where you can check the status of your payment.
See: https://sa1.www4.irs.gov/irfof/IRServlet?app=IRACTC and http://www.irs.gov/irs/article/0,,id=180250,00.html