The First-Time Home Buyer Tax Credit was a significant motivating factor for Santa Barbara home buyers up until its expiration earlier this year. The tax credit resurfaced in the news recently regarding IRS errors that you, or anyone who utilized the tax credits, should be aware of. An audit by the Treasury Inspector General for Tax Administration (TIGTA) found some individuals receiving the First-Time Home Buyer Tax Credit had incorrect purchase dates recorded on the IRS system. This can cause some taxpayers to receive incorrect notices and for other taxpayers to not be identified that are required to repay the credit. Anyone who received the credit should be aware of this potential incorrect notice in the event that they did have the correct purchase dates.
The IRS is developing a comprehensive strategy to identify individuals with First-Time Home buyer repayment requirements as a result of the TIGTA’s recommendations. Here is what Santa Barbara home buyers need to know about the incorrect notices:
- An estimated 4.1% (73,119) of the estimated 1.77 million individuals receiving the Credit had incorrect purchase dates
- Of those who had incorrect purchase dates, an estimated 59,802 had purchase their homes in 2009, but the IRS incorrectly recorded the purchase as 2008 or the years were not recorded
- If a receiver of the Credit falls into this category, they could incorrectly receive a notice requiring repayment
Additionally, the TIGTA report found that the IRS made an error in had providing the credit to approximately 800 fraudulent tax claims using social security numbers of deceased citizens. A full copy of the TIGTA’s report can be found here.
If you’d like to learn more about the now expired home buyer tax credit program, visit one of the many blog posts on the Santa Barbara Real Estate Blog posted prior to the expiration. If you would like to begin a new, customized Santa Barbara real estate search, contact Daniel Zia (805-637-7148 or Daniel@ZiaGroup.com) or visit our comprehensive Santa Barbara real estate website. Thank you for visiting the Santa Barbara Real Estate Blog.
With the close of the Federal Home Buyer Tax Credit program coming up at the end of April (10 days remain), Zia Group clients have been asking about the California tax credits. Here’s a recent update from the California Association of Realtors who warns how quickly the California tax credits might go:
The $100 million allocated for California’s first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.’s Economics team. California’s Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.
C.A.R.’s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available. For more information, please refer to C.A.R.’s Homebuyer Tax Credit Chart 2010.
The Zia Group would like to remind you that we cannot and do not give tax or legal advice. You should seek specific advice from an accountant, attorney, or other professional as you deem appropriate.
Thank you for visiting the Santa Barbara Real Estate Blog, your source for updates on the Federal and State Home Buyer Tax Credits. You can find more information on our Santa Barbara real estate website or by clicking on the “Home Buyer Tax Credit” category of the blog.
Buyers considering Santa Barbara real estate have a brief window of opportunity to cash in on up to $18,000 in combined tax credits. To be eligible and obtain both federal and state tax credit, a first time home buyer must enter into a contract (principal residence) before May 1st and close escrow no later than June 30th. Most buyers are familiar with the $8,000 First Time Home Buyer Tax Credit, but should also be aware that the additional $10,000 state tax credit is divided over three years.
If you’re not a “First Time Home Buyer,” you’re still eligible to obtain up to $16,500 in combined tax credits within the same time line as above. There are specific requirements for non-first time home buyers so contact Daniel Zia if you are interested in more information. Or, click on the “Home Buyer Tax Credit” category for more blog posts on the topic.
Under the federal law slated to soon expire, a first-time home buyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits as a first-time home buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits. (From the California Association of Realtors) Additional information can be found at the California Association of Realtors website.
Are you interested in searching the Santa Barbara MLS for property eligible for up to $18,000 in federal and state tax credits? Visit the comprehensive Santa Barbara real estate website for everything necessary to begin your search. If you have questions, post them below or contact Daniel, your Santa Barbara Realtor, by email (Daniel@ZiaGroup.com). Thank you for visiting the Santa Barbara real estate blog.
This is a Home Buyer Tax Credit question I frequently receive from clients and it focuses on Santa Barbara home buyers who have a cosigner. Pass this information on to any friends and family who are considering a purchase in the next month. The Home Buyer Tax Credit is currently set to end on April 30, 2010.
Question: Taxpayer A is a single first-time home buyer. Taxpayer B (parent) – for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
Answer: Yes, Taxpayer B is not a first-time and cannot claim any portion of the credit, but A may claim the entire credit if the home was purchased as Taxpayer As primary residence.
This information comes from IRS guidance. The Zia Group cannot provide tax advice and clients should consult their accountant before claiming the tax credit.
If you have a question about Santa Barbara real estate or are interested in more of the ZiaGroup’s recommended service providers, contact Daniel Zia, your Santa Barbara Realtor, at (805) 637-7148. Thank you for visiting the Santa Barbara Real Estate Blog and we hope this is a resource for you on your Santa Barbara real estate search.
With the Federal Home Buyer Tax Credit quickly approaching its April 30, 2010 purchase agreement deadline, Santa Barbara home buyers are asking more questions. Here are two examples for those interested in the Home Buyer Tax Credit.
Q: (Existing homeowner credit) Are there any income limits for claiming the tax credit?
Answer: Yes. For sales occurring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts. Source: NAHB
Q: I’m an existing homeowner with a lot of equity in my home. I want to purchase a home with a non-negotiable price of $825,000. Am I able to claim any of the $6,500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit.
We’ve visited the Home Buyer Tax Credit topic frequently on the Santa Barbara real estate blog and have many more posts for you to browse by clicking on “Home Buyer Tax Credit” category. The Zia Group team is here to serve you and your Santa Barbara real estate and Montecito real estate needs. Contact Daniel direct at 805-679-7148 or visit our comprehensive Santa Barbara real estate website. Thank you for visiting the Santa Barbara real estate blog.
The ZiaGroup team has developed many
exclusive services for buyers working with us. One of these services is a bi-monthly email email alert to all Active, Pending and Upcoming Santa Barbara REOs. This list provides details on current REOs including the following:
- bedrooms + bathrooms
- listed price + status
- condition of home (if available).
The update includes a link to view all of the details of any active or pending properties, as well. This week’s exclusive Santa Barbara REO list included 50 properties for ZiaGroup clients to view preview and get a leg up on the competition. This may be a great tool for you to get the first “crack” and an excellent value.
If you are interested in receiving this twice-monthly REO update from me, please send me an email at Daniel@ZiaGroup.com. We hope that you will find the exclusive service valuable in your search, however, you are welcome to unsubscribe at any time.
Also, keep in mind another ZiaGroup service that may be helpful in your Santa Barbara Home Search. Our automatic email home finder in a tool where we create a custom search in the Santa Barbara MLS for you using your specific criteria. Then, every week, or at a frequency of your choosing, all of the new listings that match your criteria will be emailed to you. It’s a great way to learn about or keep up-to-date on the current inventory in our market and gives you a leg-up on other potential buyers who only hear about a property through the newspaper.
Explore our recent blog posts (below) for more information on Santa Barbara real estate homes, first-time home buyer tips, updated tax credit information and more. We sincerely appreciate your visit and look forward to assisting you in your Santa Barbara real estate search. Please contact me directly (805-637-7148) if I can be of further service to you.
The Internal Revenue Service recently released the new form that eligible home buyers need to claim the first-time home buyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time home buyer credit.
The following is an excellent overview of the details of the new form and comes from RISMedia. You can share this information with friends or family in a position to take advantage of the offer, which ends April 30, 2010, by forwarding this article directly.
IRS UPDATE ON HOME BUYER TAX CREDIT:
The new form and instructions follow major changes in November to the home buyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.
With the release of Form 5405, First-Time Home Buyer Credit and Repayment of the Credit, and the related instructions, eligible home buyers can now start to file their 2009 tax returns. Taxpayers claiming the home buyer credit must file a paper tax return because of the added documentation requirements.
The IRS expects to start processing 2009 tax returns claiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the home buyer credit.
Some of these early taxpayers claiming the home buyer credit may see tax refunds take an additional two to three weeks. In addition to filling out a Form 5405, all eligible home buyers must include with their 2009 tax returns one of the following documents in order to receive the credit:
- A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
- For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
- For a newly-constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
EXISTING HOMEOWNER TAX CREDIT:
In addition, the new law allows a long-time resident of the same main home to claim the home buyer credit if they purchase a new principal residence. To qualify, 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. The IRS has stepped up compliance checks involving the home buyer credit, and it encourages home buyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:
- Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
- Property tax records or
- Homeowner’s insurance records.
The IRS also reminds home buyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.
Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those home buyers filing early, the IRS expects the first refunds based on the home buyer credit will be issued toward the end of March 2010. The IRS encourages taxpayers to use direct deposit to speed their refund.
Thank you for visiting the Santa Barbara Real Estate Blog. You can find more information on the history of the Home Buyer Tax Credit on our website, along with many more current real estate topics such as REOs, Foreclosures, Short Sales and Santa Barbara real estate market trends.
For more information on the new form, visit www.IRS.gov.
With the recent extension of the First Time Home Buyer Tax Credit (up to $8,000) through April 30, 2010, there are many more interested first time home buyers throughout the country. Santa Barbara is no exception. Santa Barbara home prices in the “first-time” buyer range have come down significantly from the peak, so I’ve decided to start a blog series outlining the first time home buyer process and how to navigate those murky waters successfully. To start off, here are two things to look for when beginning your home search, as well as a list of questions that should serve as a foundation to your Santa Barbara home search in defining it’s scope and the parameters of the search. Consider these questions carefully (and realistically) as for most first time home buyers the process is one of compromise–determining what truly is important to you in your search and what you could live without during the season you’ll own your first home. First two steps:
Step #1 - Find a real estate agent with whom you are comfortable. This means you should trust his or her competence & integrity completely, and they should have the commitment and ability to communicate with you in a manner that is easily understandable. Your agent’s number one priority should be to stick to their fiduciary responsibility to do what is in your best interest, rather than their own. That’s important, because you don’t want to feel pressured to buy a house so that your agent gets his or her commission. While it’s true that an agent only gets paid when a client buys or sells a house, a good agent is going to be there every step of the way providing you with the information you need to make an informed decision and highlight the pros and cons of each property. That way, the ball is in your court and when you feel ready to pull the trigger and make that offer, you won’t have regrets or felt like you were pressured.
Step #2 - Find a loan officer that can offer you excellent customer service, is knowledgeable about the financing and home buying process, and has access to the loan products and excellent interest rates currently available. I would be happy to recommend one, or several, loan officers that meet those criteria, have great reputations in the local market, and who have taken good care of my clients in the past.
Next, you’ll need to determine what type of home you (or your spouse or family) will be happy with and what your needs and preferences are. Here are some questions to get you started on your thought process:
(1) How many bedrooms/bathrooms would you prefer? Are there any minimum or maximum square footage requirements?
(2) Is there a lot size you would prefer?
(3) Would you consider a home with a more rural location, perhaps in the foothills where you would have more privacy and separation from neighbors, or do you want more convenient access to the beach or downtown?
(4) Are views important? If so, how important? Mountain views? Setting views? Ocean views?
(5) Do you want a home that is move-in ready, or if the home needs some updating/remodeling, would you consider that as well?
(6) Are you only interested in a specific neighborhood, or would you consider other neighborhoods in Santa Barbara, Carpinteria, or Goleta?
(7) Why do you want to purchase a home in this area?
(8) What is your ideal time frame to purchase? (30 days? 60 days? 90 days? 6 months? 1+ year? Is the first time home buyer tax credit ($8,000) part of your reason to try and buy a house now (about 3 months remaining)?
(9) Do you have any preference as far as single or 2-story?
(10) Are you interested in a condo/townhouse or a PUD (Planned unit development), or do you want a single family home?
(11) If you would consider a fixer, how much fix-up work/remodeling would you be willing to do?
Take your time with these questions as they are very important. If you are local to Santa Barbara, you might have a specific area in mind. Some of my past clients needed a place within walking distance to downtown. Others enjoy the serenity of the foothills or the beauty of the Mesa. If you would like to begin that search now, you can use the Free Santa Barbara MLS (multiple listing service) home finder by clicking here. You can easily customize your search and view properties for sale. If you would like to begin your real estate search with an agent, I would be grateful to learn more about your preferences and to potentially assist you in your home search. One of our services that may be helpful for you as you watch the market, or actively search, is our automatic email home finder. With this service we create a custom search in the MLS for you using your specific search criteria. Then, every week (or at a frequency of your choosing) all of the new listings that match your criteria will be emailed to you. It’s a great way to learn about, or keep up-to-date on the current inventory in our market and gives you a leg-up on other potential buyers who only hear about properties through the newspaper. If you are interested in having me set you up on this service, please let me know (Daniel@ZiaGroup.com).
Thank you for reading Part 1 of this “Buying Your First House” post. If you’d like to receive the rest of the first time home buyer series we will be posting, SUBSCRIBE to the blog by adding your email address in the box at the top of the page. You can also follow our updates on Twitter, Facebook, and LinkedIn. Thanks for visiting!
The recent extension and expansion of the Home Buyer Tax Credit has created many questions for our clients and it is why we continue to share the answers on the Santa Barbara Real Estate Blog. More information can be found through the blog by clicking on the “Home Buyer Tax Credit” link on the right side of this page or by visiting our website dedicated to informing you about the recent extension and expansion.
This question focuses on EXISTING homeowners with value of up to $6,500. Feel free to pass the link on to anyone you know who might find it useful.
Question: Existing homeowner credit: Im already a homeowner. If I buy another home after Nov. 6, 2009, to use as my principal residence, do I have to sell my home to qualify for the tax credit?
Answer: No. If you meet all the requirements for the tax credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09).
Another factor for California home buyers in 2010 will be the Governor’s proposal to extend and expand the $10,000 home buyer tax credit to include the purchase of existing homes in addition to new residences for first time home buyers. Stay tuned to the Santa Barbara Real Estate Blog for updates on this tax credit and more Santa Barbara Real Estate news.
As a client-centered Santa Barbara realtor, I’d love to put my team and knowledge to work for you. As you explore the services that the ZiaGroup team can offer you, we are confident that you will see that there is a better way to buy or sell your home. We are looking to develop a life-long relationship with you and we are eager to prove our expertise and show you how we can help.