Time is running out. You only have until Dec. 1 to take advantage of the sweetest deal out there for first-time homebuyers.

It's called The American Recovery and Reinvestment Act of 2009, and it could mean thousands of dollars in your pocket. More commonly known as the $8,000 first-time homebuyer tax credit, it is designed to knock you off the fence and make a decision to buy a house before December.

I have had many clients asking about the $8,000 tax credit, and have answered the same questions so many times that I feel compelled to lay it all out there for you in plain English.

It really is an exciting opportunity. It could be the difference between renting for another year and home ownership by the end of the year.

The $8,000 Homebuyer Tax Credit in a nutshell:

Is for first-time homebuyers only

It's not a loan; it doesn't have to be repaid

It's equal to 10 percent of the purchase price of the house - up to $8,000 (hence the name)

Income affects how much of the tax credit you qualify for

It's only available for houses purchased through Dec. 1

First-timers only

For these purposes, a first-time homebuyer is a person who has not owned a primary residence in the three years leading up to the closing date on the new house. Primary residences are defined as single-family detached houses, townhouses, condominiums, some prefabricated (mobile) homes, and houseboats. And it has to be within the U.S. Weekend and vacation homes and timeshares are secondary homes and generally do not apply.

In the case of married couples, if one spouse has owned a primary residence within the past three years, it disqualifies the other from the credit.

However, in the case of a parent and child buying a house together, it may be different. If the parent has owned a primary residence but it is the child's first house, then the credit can be claimed - but only by the child.

Each case is different, so be sure to investigate your own before assuming you don't qualify.

Touch it, feel it, spend it.

The $8,000 tax credit has to be claimed on an individual's income tax return, but this is called a "refundable" credit, meaning it translates into real dollars that the IRS will either accept as payment for taxes owed or refund to you in a real check if the IRS owes you.

In other words, every dollar of this tax credit reduces income taxes by a dollar.

Here are some basic examples:

If, after figuring out your income taxes, you owe Uncle Sam nothing, the IRS will cut you a check (refund) for $8,000.

If you owe $1,000, you will get a check for $7,000 ($8,000 - $1,000).

If you owe $8,000, you will break even

If you owe $10,000, you cut the IRS a check for $2,000 ($10,000 - $8,000)

It's for keeps

Unlike past credits and incentives that were essentially interest-free loans, you do not have to pay this one back.

There is one rule: You have to maintain the house as your primary residence for three full years. If you sell, move or leave within the first three years for any reason you may have to pay a pro-rated amount back.

The amount of the tax credit is determined by the price of the house and the buyer's income. The tax credit is a solid 10 percent of the total cost of the house, with a maximum to any buyer of $8,000.

So a person buying a $75,000 house will get a $7,500 tax credit. A person buying a $250,000 house will get $8,000.

The size of your paycheck will affect the size of the tax credit. To be eligible for the full amount, the income limit for single (or head of household) taxpayers is $75,000. It is $150,000 for those married, filing jointly.

However, these amounts are based on Adjusted Gross Income (AGI) claimed on your 1040 income tax return. AGI is the total income for the year minus adjustments and "above-the-line" deductions.

There is a $20,000 cushion above these amounts in case the numbers increases significantly after calculating your Modified Adjusted Gross Income (MAGI). Eligibility limits become $95,000 for single taxpayers and $170,000 for married. MAGI includes income not claimed on the 1040, like income earned abroad, housing allowances, student loan deductions, etc.

If your MAGI puts you above the income limit you may be eligible for part of the credit. Consult a tax professional for more information.

Beat the clock

You have to have every detail and every transaction in the purchase, and transfer of title from the seller to the buyer completed and signed-off on before Dec. 1. Your closing has to occur before Dec. 1.

The first day of December is too late.

If you were hoping to use the money for a down payment on a house, you're out of luck. It happens after you have already closed on the house.

But think of it this way: You will be getting back $8,000 of your down payment and that's a good thing.

These are the basics of the $8,000 first-time homebuyer tax credit incentive as I understand them, and not to be construed as legal advice or even tax advice. For more detailed information consult a professional who is qualified to dispense it.

Jackie Toppin is affiliated with Preferred Mortgage in Anchorage, and has been in the mortgage industry since 1977. She may be reached at (907) 261-7655 or www.jackietoppin.com.