Millions of Americans have taken advantage of a popular $8,000 government tax credit aimed at encouraging home purchases, and there are still several months left to benefit from it. However, not all taxpayers will know everything they need to about the credit as filing time approaches.

With that in mind, the IRS offers some information on its Web site for people who bought a home last year, or who plan to close on a home by June 30 of this year. The credit was initially set to expire in late 2009, but Congress chose to extend it based on its popularity and positive effect on the economic recovery.

According to the IRS, the credit applies only to properties used as a primary residence and it applies to taxpayers regardless of whether they owe any tax. The credit is also contingent on homeowners keeping the property in question as their primary residence for three years.

"The first-time home buyer’s credit has also been expanded so that more homeowners now qualify for a tax break. People who have owned a home and used it as a principal residence for a 5-consecutive-year period during the 8-year period ending on the date of purchase of a new personal residence may qualify as first-time homebuyers and receive a credit of up to $6,500," said John Hewitt, CEO of Liberty Tax Service.

In 2008, the Housing and Economic Recovery Act established a $7,500 tax credit for first-time homebuyers that was comparable to a no-interest loan that would be repaid over 15 annual installments starting in 2010. However, the 2009 stimulus bill increased the amount to $8,000, and ensuing legislation extended the life of the credit into this year.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.