What a great opportunity for the first time homebuyer! If you have been considering buying a home, but have been waiting for the opportune time...well it has arrived. As part of the American Recovery and Reinvestment Act of 2009, the Federal government has enacted the Homebuyer Tax Credit providing an $8,000 tax credit to first-time home buyers (or buyers who have not owned a private residence in the past three years) who purchase a home that they will live in on or after January 1, 2009 and on or before November 30, 2009. Unlike the previous 2008 tax credit, this credit does not require repayment and will be used to reduce the purchaser’s income taxes. If any of the credit remains unused, it will be refunded.

The National Association of REALTORS recently came out with the details:

How does it works?
• The Tax credit has been raised from $7,500 to $8,000 or 10% of purchase price (whichever is less).
• The credit does not require repayment.
• First time home buyers or buyers who have not owned a home in the last 3 years.
• To qualify, a single person must make less than $75,000 a year in income.
• Joint ownership must make less than $150,000 a year in income to qualify.
• Qualified buyers must purchase home on or after January 1, 2009 and no later than November 30, 2009.
• The property must be the primary residence.
• Purchaser must remain in home for 3 years or the credit will be recaptured at the sale of home.

Are there restrictions for the home I want to purchase?
• The primary residence can be a condo, single family detached, co-op, townhouse or something similar
• The home must be located in the United States.
• Vacation homes and rental properties are not eligible.
• For new construction, the “purchase date” is the date you occupy the home. So the move in date must be before December 1, 2009.

Who is not eligible for the credit?
• If your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
• You may not buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• Vacation homes and rental properties are not eligible
• If you stop using your home as your main home.
• If you sell your home before the end of three years.
• If you are a nonresident alien you are not eligible

Recapture-3 Year Residency
• If the home is sold prior to three years of ownership, the tax credit must be repaid at closing.
• This provision is designed to prevent flipping homes in order to get the credit.

Other Provisions
• Purchasers who utilize state/local revenue bond financing can now use the credit.
• Purchasers who bought before January 1, 2009 and received the previous $7,500 tax credit are still subject to the terms of that repayable credit.

When Can I Claim the Credit?
• It can be claimed on your 2008 Tax Return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.

So don't let this great opportunity pass you by...Buy!

 Many continue to speculate on the real estate market for 2006, some seeing the glass half empty and others seeing it half full.  While home prices took a typical seasonal drop from October to November, “Southern California home sales remained at near-record levels in November as prices climbed to new heights…” reports DataQuick Information Systems.  The medium priced home in San Diego rose 6.4% to $518,000 from one year ago.  Experts believe the home prices continue to climb as a result of the continued demand and expected rise in interest rates.    

However, 9.5% fewer homes sold in November 2005 (3,937) compared to November 2004 (4,350).   Along with the holiday season, the slowing number of sales may be responsible for the increased number of homes on the market. 

            Even though San Diego home prices have slowed compared to other Southern California areas, it still remains the third highest behind Orange County ($616,000) and Ventura ($612,000).          

What about the rest of California?  The California Association of Realtors (CAR) reports the median price home in California is at $548,400 in November 2005, up 16.2% from one year ago; however, they also report an 11.2% decline in the number of homes sold.

So is the bubble ready to burst?  The experts at DataQuick do not see any signs of distress in the market.  “Foreclosure activity is edging up from the bottom, but is still low.  Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity.”  So barring any unexpected events or economic recession, the forecast for San Diego’s real estate market in 2006 is sunny with slow but steady price growth.