New Condos Downtown San Diego: First-Time Homebuyer Tax Credit

Congress modified the first-time homebuyer tax credit in this year's American Recovery and Reinvestment Act. There are some real incentives for first-time homebuyers and the clock runs out at the end of the year. You can download or read for yourself.

This credit can theoretically end up giving you back up to $8000 in cold hard cash. Not highly likely, but definitely possible.

• The credit is a maximum $8000
• All principal residences are eligible
• This credit either reduces or can eliminate income tax liability for the year of purchase. Purchasers will receive reund for unused amount when tax return is filed
• The income limits are $75,000 for an individual or maximun $150,000 on a joint return for adjusted gross income
• Purchaser and purchaser's spouse may not have owned a principal residence in 3 years prior to purchase.
• Purchasers can use this credit and bond financing revenue where applicable
• The credit does not have to be paid for purchases on or after January 1, 2009 and before December 1, 2009. The exception is if you sell within three years of purchase. Unless there is an exemption (and there are a couple of exemptions), the entire amount of credit is recaptured on the sale. So in other words, plan on living and owning this property for at least three years if at all possible.

If you would like additional information or IRS form 5405 for First-Time Honebuyer Credit, contact us. We will tell you where to go next.

Of all the things going on in the "stimulus", this may actually be one of the best things because a prospective buyer hasprices they can afford, historically low interest rates, and now a tax credit of $8000. TheState of California is also throwing in a $10,000 tax credit for purchase of a brand new never been lived in property, but there are fewer of those available. Just using the $8000 credit is a great opportunity.

By Sharyn & Victoria Crown, Downtown San Diego real estate brokers

This is part of a series of articles entitled, New Condos, Downtown San Diego Style