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Prospective home buyers Lars Kalnajs and Leah Fuchs talk to real estate broker John Skrabec of Live Urban Real Estate in the yard of a home that has been reduced in price in Denver, Colo. - 


Tess Vigeland: All these various rescue plans will often mention a certain class of homebuyer -- first-timers. Last year, they got a $7,500 tax credit that they eventually have to pay back. Though the latest stimulus give them an $8,000 one that they don't have to pay back. But what exactly is a "first-time homebuyer"? It's actually not as easy as it sounds. Rico Gagliano is here with some answers in the latest installment of The Marketplace Decoder.

Rico Gagliano: First the bad news: as defined by these new tax credit laws, a "first time home buyer" is not simply someone buying a home for the first time. Because, you know, that'd be too easy. The good news: the definition is the same whether you're claiming last year's 7,500 buck tax credit, or the new one for eight grand.

Amanda Weier: A first-time home buyer is defined as a person who has not purchased and occupied a home within the previous three years.

That's Amanda Weier -- she's a real estate agent here in L.A. And you heard her right. If you bought a home, say, four years ago, then sold it and rented an apartment for the last three years -- blam! You're a first-time buyer again. And there's more good news. You can be considered a first-time buyer even if you currently own a home. You just can't have lived in it.

Weier: If you own a vacation home, or a rental home, which you have not resided in, you can still qualify for this credit.

Pretty sweet, right? But before you get too excited, there are a few catches. First, the home you're buying has to be your principal residence. Second, you can't be rich.

Weier: The credit is for people whose adjusted income is $75,000 and lower. If you're over $95,000, you're not going to qualify for it at all.

If your adjusted income falls somewhere between those numbers, you enter the wonderful world of IRS formulas, by which you might get some -- but not the entire -- credit. Of course, if you're married, the income limit doubles. But speaking of marriage, that's catch No. three.

Weier: If two people are married and one person owned a residence the previous three years, you do not qualify.

That's right: if you're a first-time home-buyer, but your spouse isn't, you can't get the credit for a new home. So, add that to the list of things you'll have to work through in your relationship.

Now, if you want to purchase a home with someone you're not married to, that's a different story. If both of you are first-time buyers, you split the tax credit. If only you are, you get the whole shebang. One possible moral of the story: marry someone who doesn't have a home, or buy a place with a friend who does.

In Los Angeles, I'm Rico Gagliano for Marketplace Money.