Carlsbad, CA—It’s that $8000 Federal Income Tax Credit for first time home buyers that is all the buzz in San Diego real estate circles.
We receive calls and inquiries almost daily from renters who are looking to make the leap to home ownership. It’s not just the idea of having a home of their own to decorate as they wish– it’s also the lure of that $8000 tax credit that looms so large.
Time is running out, though, with this federal tax benefit that is slated to expire November 30, 2009. so you may wish to consider these important factors that could determine whether you even qualify for the federal tax credit–and some hazards you may wish to avoid.
- To qualify, you must purchase your home between Jan 1 and Nov 30, 2009. Single buyers must have an adjusted gross income of $75,000 or less, with $150,000 for married couples.
- You are a first time home buyer if you haven’t owned a home in the last three years. Great news for those who got out of the San Diego real estate market three or more years ago!
- This is a “refundable” tax credit. Even if you owe only $1,000 in federal taxes you will be entitled to the full eligible tax credit.
- Buyers receiving the credit will have to own the home (and presumably live in it) for a full 3 years, or the credit must be returned to the government. Exceptions may be made in certain cases, such as death or divorce. (And what about San Diego military relocation?)
- Beware of trying to negotiate a short or pre-foreclosure sale with hopes of closing prior to Nov 30, 2009. Many of these transactions are taking 3 to 6 months or more to process–and some end up going to foreclosure before closing can take place. Better to seek a well-priced foreclosure or motivated seller if you are seeking a certain bargain and want to be sure of closing by that November deadline.
- Real Estate Auctions? Beware these, as well. You could be bidding on a property with undisclosed and fatal flaws that may not appraise–especially if you overpay in bidding frenzy. Better to carefully negotiate and inspect the home you are buying.