If you’re in the market for a new home and hope to take advantage of the first-time homebuyer tax credit, you’ll need to purchase a principal residence before May 1, 2010 (or before July 1, 2010 if you enter into a written binding contract prior to May 1, 2010). If you–and your spouse, if you’re married–did not own any other principal residence during the three-year period ending on the date of purchase, the credit is worth up to $8,000 ($4,000 if you’re married and file separate returns). If you–and your spouse, if you’re married–have maintained the same principal residence for at least five consecutive years in the eight-year period ending at the time you purchase a new principal residence, the credit is worth up to $6,500 ($3,250 if you’re married and file separate returns).

The credit, however,  is limited to those whose modified adjusted gross income  less than $125,000.  While this can restrict many, it does offer an opportunity for your kids in college.   In many cases, real estate around a college town can be appealing and if your kid will stay in at the college for three years (we hope), there may be an overall benefit of having your college kid purchase a home versus paying rent for 3 or 4  years.   You will have do your homework to see if this can make sense overall in your overall financial planning.