Important Information About the First-Time Homebuyer Credit

Team Patereau was discussing what can and can't be done with the First-Time Homebuyer Credit that came out of the Obama bailout plan. I said that our client can close on their first-time contract before June 30, 2010, and claim the credit on their 2009 tax return. The other half of Team Patereau said that wasn't the case. So, I looked it up at the IRS website, and sure enough, you can! There's plenty of other rules, but here's the key points, and you can and should discuss these with your tax preparer. One reminder, you can't e-file if you add this form to your mix. What the heck is that about?

1. You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.
2. If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
3. For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
4. A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
5. The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250. The maximum credit for first-time homeowners is $8,000 (up to $4,000 for married filing separately).
6. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
7. The IRS will issue a revised Form 5405 to claim this credit on 2009 tax returns. The revised form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
8. Homebuyers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return. For homes purchased in 2009 there is an option to take the credit on an original or amended 2008 tax return.
9. The new law includes documentation requirements. See revised Form 5405 for details.
10. No credit is available if the purchase price of the home exceeds $800,000.
11. The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
12. A dependent is not eligible to claim the credit.

IRS encourages all eligible homebuyers to take advantage of the First-Time Homebuyer Credit but at the same time cautions taxpayers to avoid schemes that help ineligible people file false claims for the credit. Visit IRS.gov/recovery for more details on the First-Time Homebuyer Credit. Forms are available on www.irs.gov or by calling the IRS at 1-800-829-3676.

Just So You Know...

Here's come information from CNN Money.com that gives you a heads up on the Federal First Time Buyers Tax Credit. Only the IRS can change things, but knowing the rules for getting the credit are helpful.

Just as the Teschkes in the article, several of our First Time Buyers are planning to use their increased tax refund due to the tax credit to invest in improvements for their new home. In our humble opinion, the stimulus is working.

This Week's Realty Times Report

We get a lot of good, quick real estate information from this site. The report this week is that the "Recovery" has started, but is being held back by continuing high unemployment.

What's it like for you? Has your recovery started?

"Inventory" is Down

We think you will be interested in this article from the Wall Street Journal on the condition of real estate "inventory" in California. Then it occurred to us that you might be interested in the definition of inventory, so we looked it up. Here's a nice, concise definition:

The amount of time it would take to sell all current listings at the current sales pace if no new listings became available. Normally measured in months (i.e. there's currently 8 months of inventory available).
This definition of Inventory Level contributed by finecoastalliving, through the site called Real Estate Forums.

And now for the story...

What's it like in Gilroy? Very competitive, when properties are priced right. Pricing is the key. It always has been and it always will be.

Government Exiting, Strategically, from the Mortgage Markets

“For more than a year, the government pulled out the stops to revive home buying by driving down mortgage rates. Now, whether the housing market is ready or not, the government is pulling out.” So says The Washington Post in an article.


Some say the government action to pull out is too soon, others say the pull out is the plan, and good for the economy. Read the full story here.

2010 - What Will It Bring?

Nobody ever knows for sure, but experience and longevity help with predictions of what's to come. Intero CEO Gino Blefari shared some of his predictions for 2010 this week and we thought you might be interested in what he has to say. Read Gino's predictions here.

A Friday Night in Gilroy

Gilroy Apartment for Rent

On-Demand Property Information - At Your Fingertips!

Check it out: Intero's new and exclusive CoolApp/text solution (video compliments of John Thompson Intero's Executive Vice President) - Text INTERO to 59559 and get on-demand instant property information on every property available for sale in the Bay Area via MLSListings - Fast & FREE.

Happy New Year!