Real estateReal estateInsiderInsider

A PublicAtion of the GrouP, inc.

Vol. 34, No. 1 January 2010

Federal Homeowner Tax Credit Deadline is April 30, 2010In November the Federal Homeowner Tax Credit was expanded and extended. The tax credit was expanded to include both first-time buyers and long-time residents. The income limits were expanded to $125,000 for a single person and $225,000 for a couple. The tax credit was extended. A home must be under contract by April 30, 2010 and closed by June 30, 2010.

The tax credit is $8,000 for first-time buyers and $6,500 for long-time residents. A first-time buyer is defined as someone who has not had an interest in a principal residence for three years prior to purchase. A long-time resident is defined as someone who has used the home sold or being sold as a principal residence consecutively for five of the previous eight years. The seller of the property can be anyone except a direct relative. The buyer cannot be claimed as a dependent on someone else’s tax return.

The maximum purchase price of a property is $800,000. The program is designed for primary residences as opposed to investment property. The purchaser should plan on owning the property for at least three years. If the property is sold within three years, the tax credit must be returned.

A tax credit differs from a tax deduction. Qualifying purchasers under this program will have a credit toward their income taxes owed. If the income taxes owed are less than the credit, the qualifying purchaser will receive a tax refund. Qualifying purchasers simply needs to include IRS Form 5405 and the settlement statement with their tax return.

Of course prospective buyers should seek the advice of a CPA to discuss the particulars of their own situation.

The Group has just produced a Homebuyer Tax Credit Kit which includes everything a prospective buyer or seller needs to know about this program. Complimentary copies are available from your Group REALTOR®.

Homebuyer Tax Credit Kits

are now available. Contact

your Group RealToR® to

receive your copy.

The Federal Homebuyer Tax Credits Expire April 30, 2010

$8,000 Available to First-Time Buyers

$6,500 Available to Long-Time Residents

tax creditHomebuyer

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RetuRn SeRvice RequeSted

Homebuyer Tax Credit Kits are now available, contact your Group REALTOR® to receive your copy.

NEw tax CREdit RuLEs

FeAtuRe Rules As enactednovember 2009

First-time Buyer –Amount of credit

$8,000 ($4,000 marriedfiling separate)

First-time Buyer –definition for eligibility

May not have had an interest in a principal residence for 3 years prior to purchase

current Homeowner –Amount of credit

$6,500 ($3,250 marriedfiling separate)

effective date –current Owner

November 7, 2009

Long-time Resident –definition for eligibility

Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years

termination of credit Purchases after april 30, 2010

Binding contract Rule so long as a written binding contract to purchase is in effect on april 30, 2010, the purchaser will have until June 30, 2010 to close

income Limits $125,000 – single$225,000 – marriedadditional $20,000 phase out

Limitation on cost of Purchased Home

$800,000

Purchase by a dependent

ineligible

Anti-fraud Rule Purchaser must attach documentation of purchase to tax return

Tax credits creating new homebuyersThe Wall Street Journal reported that extraordinary government efforts to stabilize the housing market are paying off. Sales of previously occupied homes surged in November to the highest level in nearly three years, spurred by federal subsidies for starter homes and a massive Federal Reserve push to drive down mortgage rates.

MoodysEconomy.com chief economist, Mark Zandi, estimates nearly 400,000 new and existing home sales are attributable to the first-time home buyer tax credit. The pace of home sales is up 46 percent from its bottom in January according to data released Tuesday by the National Association of REALTORS®.

Here in our local market we notice substantial showing activity in the $150,000 to $450,000 price range. By tracking the number of buyers viewing all of our listings we are able to estimate future sales. It appears that sellers in this ‘mid-range’ price should experience activity in the first quarter of 2010.

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Showing History of Group Listings November 1, 2009 through december 31, 2009