Homebuyer Tax Credit Laws Summary for US and California

To help stimulate home sales and the economy, both the US and state governments are offering income tax credits for Californians purchasing homes.

 

U.S. law offers up to $8,000 for first-time homebuyers and $6,500 for long-time residents.  This program ends April 30, 2010, and you must get your purchase contract signed by that date.

 

California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never been occupied, and this program is from May 1 to December 31, 2010. 

 

Here’s a summary of the two homebuyer income tax credit laws: 

 

HOMEBUYER TAX CREDIT	FEDERAL	CALIFORNIA
Amount of Tax Credit	10% of purchase price not to exceed $8,000 for First-Time Homebuyers or $6,500 for Long-Term Residents.	5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.)
Date of Purchase	By June 30, 2010, but taxpayer must enter into a written binding contract by April 30, 2010.	From May 1, 2010 to July 31, 2011, but an enforceable contract must be executed by December 31, 2010.
Principal Residence	Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).	Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).
Type of Property	House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S.	Single-family residence, whether detached or attached.
Eligibility	1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR 2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years.	1. First-Time Homebuyer: Up to $10,000 if the buyer (or buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR 2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller.
Income Restriction	Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers).	No
Maximum Purchase Price	$800,000.	N/A
Refundable	Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.	No
Repayment	No repayment required if the buyer owns and occupies the property for at least 36 months after purchase.	No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase.
Multiple Buyers (not married to each other)	Tax credit may be allocated between eligible taxpayers in any reasonable manner.	Tax credit must be allocated between eligible taxpayers based on their percentage of ownership.
Maximum Credit for All Taxpayers	N/A	$100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis.
Reservations of Credit	N/A	Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive.
When to Claim	Full tax credit may be claimed on 2009 or 2010 tax returns.	1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).
Tax Agency	Internal Revenue Service (IRS).	Franchise Tax Board (FTB).
How to File	First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns	Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law.
Other Restrictions	Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien.	Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2.
Legal Authority	26 U.S.C. section 36.	Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183).
Date of Enactment	November 6, 2009 (as revised).	March 25, 2010.
More Information	IRS Web site at http://www.irs.gov/newsroom/article/0,,id= 204671,00.html.	FTB Web site at http://www.ftb.ca.gov/ individuals/ New_Home_Credit.shtml.

Source of Information:  CALIFORNIA ASSOCIATION OF REALTORS® - click here.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar Association member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

 

This is excellent information on US and/or California homebuyer tax credits.  However, you should always consult with your qualified income tax professional, certified public accountant or tax lawyer for determination of your own income tax situation.

Posted via email from Explore OC Homes

Orange County Homes Undervalued at Sold Prices During 4th Quarter 2010

Economists at IHS Global Insight and PNC Financial have said that Orange County, CA, homes were priced 5.6% too low in 2009’s fourth quarter.

Comparing local house-sale prices to historical real estate and economic trends, IHS-PNC estimates that Orange County homes were undervalued for the 7th consecutive quarter after being overvalued for the previous 20 quarters.

The latest 5.6% undervaluation — on par with the likes of Louisville, Ky.; Jefferson City, Mo.; Fairbanks and Abeline, Texas — was a roughly equal to the previous 5.5% in Q3. The current wave of Orange County undervaluation peaked at 11.4% in Q4 of 2008.

Also said at IHS report …

• For historical memory sake, Orange County overvaluation peaked at 33% in 2006’s Q2.
• Atlantic City, N.J., was the most overvalued nationally (33% too high) in Q4 2009.
• One reason the undervaluation is shrinking locally is the rising price of homes sold. By IHS-PNC math, O.C. home pricing was up 6.4% in a year as 2009 ended — 3rd biggest gain among the 330 regions tracked nationwide.
• The D.C. region had the largest Q4 price gain (+10.5%) while Las Vegas had the biggest loss (-19.4%).
• The report concludes: “Two years of relentless house price depreciation finally ended in the summer of 2009. The second half of 2009 saw minimal changes in home prices, signaling stabilization at long last, if not yet recovery. … We ended 2009 with no extremely overvalued metros, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued.”

See original Jon Lansner and Jeff Collins article, Orange County Register, March 22, 2010 - click here.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar Association member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

I'm not surprised.  The Orange County housing market was probably undervalued during 4th quarter last year.  We have seen buyers at Irvine recognizing sign of good opportunity, and they have been aggressive with offers since Super bowl Sunday, clearing well priced homes from the market in a very short time.

Posted via email from Explore OC Homes

Irvine Housing Market Update - Continuing Positive Rebound Toward Recovery

Irvine, California, housing market update shows continuing positive rebound leading toward recovery. 

 

Homes sales volume at Irvine continues to increase at 7 of the 8 Irvine zip code areas for 22 business days ending March 0, 2010.

• 534 Irvine homes are now active and listed for sale.
• 177 Irvine homes were sold during the past thirty days.
• 515 Irvine homes are in pending to be sold status with signed purchase contracts.
• 128 of the Irvine homes now for sale are short listings (24.9% of market).

Market time for Irvine homes now for sale would be average expected time it will take to sell all 515 homes now listed for sale. 

 

When compared to the 177 Irvine homes sold the past thirty days, expected market time is 2.9 months, which is a short time and now favors sellers.

 

Because there are so few Irvine homes now for sale (534) relative to buyer demand (177 sold past thirty days and 515 now under pending contract), the local housing market here trend definitely favors the sellers.

 

See Lansner at OC Register March 26, 2010, article - Home Prices up in 57% of OC zip code areas - click here.

 

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

Posted via email from Explore OC Homes

Tustin Housing Market update - beautiful city in central to South Orange County, CA

Tustin, California, housing market update shows recent trend toward lots of homes now in escrow and under pending purchase contract. 

 

Tustin is a special place, a beautiful city with good schools and famous for parks, hiking trails and recreational areas.  It's located at the central to south Orange County area, just south and east of Santa Ana and north of Irvine.  Tustin has homes built near the old town between 1943 to 1965, which are popular neighborhoods with lots of history.  Other homes were built in the hills and newer Tustin Ranch areas. 

 

170 Tustin homes are now listed for sale.

• This is probably not enough Tustin homes for sale now to satisfy buyers.

107 of those active homes for sale are regular equity listings.

 

10 are REO bank owned for sale.

 

53 homes for sale are short sale listings.

• Short sale listings are 31% of Tustin's current housing market.

56 Tustin homes were sold during the last thirty days.

• This shows average market time of 3.5 months when you compare number of sold the past thirty days to number now for sale, and this is balanced.

205 Tustin homes are now under pending purchase contract or in escrow.

• This is an unusual and large number in comparison to the 170 homes now listed for sale, probably because many short sales were put on the market and are now under purchase contract waiting for lenders to approve the debt forgiveness.  This short process from listing to sale takes a long time and sometimes as much as a year.

The Tustin housing market trend has more homes now pending sale and in escrow than number of those listed for sale.  This trend favors sellers and is also increase over last month and same time last year. 

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar Association member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

 

 

 

 

Posted via email from Explore OC Homes

CA Homebuyers Will Like the New California State Income Tax Credit - starting May 1, 2010

Just in time when the US Homebuyer Tax Credit is set to expire on April 30, 2010, California Governor Schwarzenegger signed legislation (new law) on the State Homebuyer Income Tax Credit.

 

Governor Schwarzenegger on March 25, 2010, signed CA AB 183 providing $200 million for home buyer tax credits.  This allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

 

Eligible taxpayers for this state tax credit must:

• Close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or
• Close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. 

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). 

 

Buyers also must be at least 18 years old and be unrelated to the seller.  First-time buyers are defined as those who have not owned a home in the past three years.

 

Source: California Assoc. of Realtors, March 25, 2010.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar Association member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

________________________

 

If you want to take advantage of this CA homebuyer income tax credit, contact your local REALTOR and get going for planning to find and buy the right home.  And consult with a qualified income tax professional or certified public accountant about this CA income tax credit.  

Posted via email from Explore OC Homes

What a Homeowner Must Know About Getting the US Income Tax Exemption on Mortgage Debt Forgiveness

What a homeowner must know about getting income tax exemption of mortgage loan debt forgiveness.

 

And how does a homeowner qualify and get US income tax exemption for debt forgiven by the lender?

 

If homeowner wants to sell his house and owes more on the loan than value of the property, he or she will be talking with a qualified REALTOR and his area and wondering about procedure for short sale. 

 

The IRS gets involved in mortgage principal write-downs, because the tax code generally treats any forgiveness of debt by a creditor in excess of $600 as ordinary taxable income to the recipient.

Under 2007 legislation, certain home mortgage debt cancellations, such as through loan modifications, short sales or foreclosures, may be exempted from tax treatment as income.

What are the tax implications when your lender agrees to debt forgiveness?  Underwater home borrowers can qualify for tax relief when a home lender agrees to lower the amount of debt. 

 

What to know?

 

First.  The federal tax exclusion only applies to mortgage balances on your principal residence -- your main home, and not on second homes, rental real estate or business property.

 

Second:  Your debt reduction can only be for loan amounts that you've used to buy, build or substantially improve your principal residence, which include refinancings that increased your total mortgage debt attributable to renovations and capital improvements of the property.

 

Third:  When your lender forgives all or part of your mortgage balance, the lender is required to issue you an IRS Form 1099-C, a "Cancellation of Debt" notice, which is also sent to the IRS.  This shows amount of debt discharged and estimated fair market value of the house securing the debt.

 

Fourth: If your lender reduces the debt on your house but you continue to own the property and live in it, the IRS will require you to reduce your "basis" in the house, which is your "cost" for income tax purposes (by amount of the forgiven debt).

 

Fifth:  This possible home loan debt-forgivness exemption will expire at the end of 2012.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer member of the California State Bar Association - State Bar number 69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Now serving as Chairperson of Local Government Relations south committee at OCAR.  Newport Beach and Irvine area Realtor.  Orange County real estate broker agent and property information resource.

If you want to claim the homeowner debt-forgiveness exemption for US income tax, always consult with a qualified income tax professional or certified public accountant.  And check out IRS Form 982 at www.irs.gov. 

 

Posted via email from Explore OC Homes

Get Your US Homebuyer Tax Credit Now - It Won't Be Extended Beyond April 30

Get your US homebuyer tax credit now, and it won't be extended this time beyond April 30, 2010.

 

Time is almost up on the federal home-buyer tax credit, the government's gift of up to $8,000, which was intended to help the housing markets.

 

If you are just now getting into the market and want to buy the home, now is the time to move quickly.

 

What to know about this tax credit:

 

First:  This credit would be up to $8k for first time buyers, depending upon income qualifications and price of the home.

 

Second:  This is for home purchased at price up to $800k.

 

Third:  This is an extension and covers first time and other move-up buyers who qualify for up to $6,500.

 

Fourth:  Your purchase contract must be signed and into escrow by April 30, 2010.  The home purchase must be completed by June 30.

 

Fifth:  This would be for first-time buyers who have not owned a home in the past three years. For married taxpayers, both parties must not have owned during past 3 years.

 

Sixth:  You cannot purchase a home from most family members and qualify for this credit.

 

Get going now.  This income tax credit will not be extended by US Congress beyond April 30, 2010.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer member of the California State Bar Association - State Bar number 69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Now serving as Chairperson of Local Government Relations south committee at OCAR.  Newport Beach and Irvine area Realtor.  Orange County real estate broker agent and property information resource.

Search like an agent for Orange County homes and properties - Click here for free link. 

 

Get your US homebuyer tax credit now, and it won't be extended this time beyond April 30, 2010.

Posted via email from Explore OC Homes

Act Now Before It's Too Late - Find and Buy The Right Home and Get Your US Homebuyer Tax Credit

To take advantage of the US homebuyer tax credit up to $8,000, now is the time for you to act.

 

The US Worker, Homeownership and Business Assistance Act of 2009 was signed into law on Nov. 6, 2009, extending and expanding the first-time homebuyer credit allowed by previous Acts.

 

Under this law, an eligible taxpayer must buy, or enter into a binding contract to purchase a principal residence (a home) on or before April 30, 2010, and close escrow on the deal by June 30, 2010.

 

For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.  

The law also authorizes tax credit up to $6,500 for long-time homeowners buying a new principal residence and raises the income limitations for homeowners claiming the credit

This law extends the tax credit to long-time residents of the same main home if they purchase a new main home. To qualify for this, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home.  For long-time residents claiming the credit, the IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements
• Property tax records 
• Homeowner’s insurance records

If you satisfy these conditions, you could be eligible for the credit as a long-time resident of the same home.

For additional information about the tax credit, review the IRS Form 5405 and Instructions, which are available at the IRS web site - www.irs.gov.  For answers to your specific tax questions, contact your qualified income tax professional or C.P.A.

 

Now is the time to hire your local REALTOR agent and find the right home to buy and get under purchase contract no later than April 30, 2010.

 

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer member of the California State Bar Association - State Bar number 69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Now serving as Chairperson of Local Government Relations south committee at OCAR.  Newport Beach and Irvine area Realtor.  Orange County real estate broker agent and property information resource.

Search like an agent for Orange County homes and properties - Click here for free link. 

 

Posted via email from Explore OC Homes

Costa Mesa Housing Market Update - Hot Time With Buyers and Lots of Pending Transactions

Costa Mesa is the casual South OC community where people live less than two miles from the beach at Newport, where folks enjoy picnics and riding bikes, skateboarding and hiking or running with their dogs at Castaways.

 

Housing market update at Costa Mesa shows expected short market time, lots of homes now in backup and pending, and that the Costa Mesa neighborhoods have been hot and trended to favor sellers. 

• 187 Costa Mesa homes are now listed for sale.
• 11 of those listings are REO lender owned (5.8% of market).
• 56 of those active listings are short sales offerings (30% of listings).
• 48 Costa Mesa homes were sold during the past 30 days.
• 171 Costa Mesa homes are now in contract pending or backup.

So the Costa Mesa housing market is now favoring sellers with short market time comparing pendings to number of listings.  Homes with asking prices over $700k are still more challenging for sellers.

 

________________

Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer member of the California State Bar Association - State Bar number 69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Now serving as Chairperson of Local Government Relations south committee at OCAR.  Newport Beach and Irvine area Realtor.  Orange County real estate broker agent and property information resource.

Search like an agent for Costa Mesa homes and properties - Click here for free link. 

 

 

Posted via email from Explore OC Homes