The number of foreclosed properties that came on the market in Napa for 2007 were roughly 200.  In 2008, we saw approximately 700 foreclosed properties on the market.  This has caused a drastic decline in home prices.  However, this decline in home prices have brought out droves of buyers.  Sales volume is increasing, investors are returning and inventory is shrinking. In Napa, hot properties, priced at a steal, are getting multiple offers.  To me, this is a sign that a shift is going on in our local market.  There is great opportunity in this market for first-time homebuyers, investors and people wanting to move up – sell low, buy low.

Below are the details for the $8,000 First-Time Homebuyer Credit.  With affordable pricing now, it is a great opportunity to get your foot in the door.  If you would like to discuss financing and the local market, please give me a call.  There is no obligation and no pressure.

$8,000 First-Time Homebuyer Credit

1. Qualifying for the homebuyer credit
The credit is for first-time homebuyers only. As it relates to this credit, a first-time homebuyer is defined as any taxpayer who has not owned a principal (or main) residence for a period of three years prior to the home purchase. The first-time purchase must be of a principal residence.

2. Income limitations
The legislation does limit availability of the first-time homebuyer credit based on modified adjusted gross income (MAGI). Single filers with MAGI of $75,000 or less and married couples with MAGI of $150,000 or less are eligible for the full $8,000 credit. Those individuals or couples with MAGI above these limits may be available for a reduced credit on a phase-out basis.

3. Purchase window
The 2009 first-time homebuyer tax credit is retroactive to January 1, 2009 and covers purchases through November 30th, 2009.

4. Refundable credit
The tax credit reduces your final tax liability and you will be refunded whatever portion, if any, of the credit that remains after applying the credit to taxes you owe for that year. For example, let's say you qualify for the full $8,000 homebuyer credit and your total tax liability (after withholding) is $2,000. Your tax liability will be zero, and you will receive a refund for the remaining $6,000.

5. Claiming the credit
Claiming the credit is actually very simple. To take advantage of the first-time homebuyer credit, you'll need to complete IRS Form 5405 which will help determine the tax credit amount. You'll then claim that amount on line 69 of your 1040 tax return form. No pre-approval forms or applications are required!

$10,000 Credit for New Home Purchase

This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from the state of California Franchise Tax Board. (see link below)  Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. As of 4/29/09, $47,353,795 has been used.  Please check the link below for updates on the allocated and remaining credits available.

http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml