As with all things income tax-related, there are rules and exceptions to deal with.

For both first time homebuyers and existing homeowners buying a new primary residence:

• Home purchased cannot be priced higher than $800,000. There is no phase-out of the credit above $800,000. At $800,001 there is no credit available.
• Home purchased must be used as a homebuyer’s primary residence.
• Income limits are between $125,000 and $145,000 for singles (starts to phase out after $125,000) and between $225,000 and $245,000 for marrieds (starts to phase out after $225,000).
• Purchase contract must be signed by April 30, 2010 and closed by June 30, 2010 in order to qualify for the credit.
• Homebuyers who claim the credit and then sell their homes within 3 years after the purchase date may be subject to the repayment of the credit. Homebuyers who remain in their homes for at least 3 years do not have to repay any portion of the credit.
• Purchases closed in 2010 may be claimed on the homebuyer’s 2009 tax return. Filing an extension of the 2009 tax return may make this easier, and include a copy of your escrow closing statement (HUD-1) with your tax return.

For first time homebuyers only:

• Credit available up to $8,000.
• Can not have owned another home as a primary residence for the last 3 years.
• New income limits were effective as of November 7, 2009. Purchases prior to that date are subject to the prior rules, with income limits set at $75,000 for singles and $150,000 for marrieds, and with no maximum amount for the home’s purchase price.

For existing homebuyers who are buying a new primary residence:

• Credit available up to $6,500
• Must have occupied the current primary residence for 5 consecutive years out of the last 8 years. Do not need to be occupying that home currently as long as the 5 consecutive years requirement is met.

Buying a home in the Santa Clarita Valley within the maximum purchase price restrictions:

Santa Clarita Valley’s inventory of residential real estate for sale remains very low. However, most of the inventory is priced under the $800,000 purchase price limit for claiming the homebuyer’s tax credit.

• As of November 8, 2009 there were 587 homes available for sale in the Santa Clarita Valley, including single family homes, condos, townhomes and manufactured homes (not trailers).
• As of November 8, 2009 there were 95 homes available for sale in the Santa Clarita Valley priced at $801,000 or higher.
• Areas with the majority of the higher-priced homes include Hasley Canyon (Castaic), Sand Canyon (Canyon Country), Newhall, Placerita Canyon (Newhall), Southern Oaks (South Stevenson Ranch), Stevenson Ranch and Westridge (Valencia.

Time frames and snags to watch out for:

With the closing date extended to June 30, 2010, many homebuyers may feel that they have plenty of time to find a home and close escrow before that date. However, since the Santa Clarita real estate market is dominated with short sales, you’ll need to allow at least a few months to close after you get an offer sent to the seller’s bank for final approval. Expect 30-60 days or more after your offer is submitted to receive the bank’s approval for the short sale, plus another 30 days for the standard escrow period plus another 15 days in case there are any snags in the loan process (common these days). That means that you’ll need to have your purchase contract submitted and accepted by the seller (pending bank approval) by March 15, 2010 if you’re buying a short sale.

Looking for a good Realtor? Santa Clarita Realtor Linda Slocum is a Certified Residential Specialist (CRS)  and a Certified Distressed Property Expert (CDPE) specializing in Santa Clarita residential real estate, bank-owned properties and short sales. You can reach her at 661.670.0349 or at homes@HoneyStartPacking.com.

If you’re looking to take advantage of the first time homebuyer tax credit, remember that the rules state that you need to close escrow on or before November 30, or you won’t qualify for the credit. Also, remember that you “earn” your credit whether or not you pay federal income taxes this year, so this is really a nice bonus payment for first time homebuyers.

For purposes of this credit, a first time homebuyer is someone who hasn’t owned their own home for at least three years. Even those who have owned rental properties may qualify for the credit, as long as they have not owned a home as their principal residence during that 3-year window.

While November 30 may seem a long ways away, once you figure in a minimum 30-day escrow period the time to find your new home begins to shrink rapidly. Unless you’re an all-cash buyer or a well-qualified buyer that your lender can push through the system right away, if you’ve not had an offer accepted on your new home by the end of October you’ll likely not be able to take advantage of the $8,000 first time homebuyer credit unless the Feds decide to extend the deadline.

The inventory of Santa Clarita homes for sale remains very low, so there’s not a lot to choose from out there. The competition for available homes is still a bit crazy, with multiple buyers bidding on a single home becoming the norm. We are definitely trending towards a sellers’  market in the Santa Clarita area, with the multiple offers pushing sales prices above the sellers’ asking prices. Still, the home prices in Santa Clarita remain very low, so there’s a lot of opportunity for buyers to get in to homes at great prices!

If you’re a buyer, you should be working with a pro-active Realtor who can help you to stay on top of the Santa Clarita real estate market. New listings are quite often sold in just a few days and with multiple offers, so you’ll need to get in to see new listings and place your offer quickly in order to have any hopes of getting your offer accepted. Low-ball offers on new listings hoping for either acceptance of the low offer or a counter offer from the seller are not a good strategy right now, since sellers often have more than one buyer to choose from.

What can you do to maximize your chances of finding your new home in time to take advantage of the $8,000 federal tax credit? First, be sure that you have a pre-approval letter from a good lender. Then check new listings and price changes daily to see if something shows up in your price range. Be sure to get into these homes as quickly as possible, and don’t hesitate to write an offer on a home that you like. Waiting a few days to make that decision often means that another buyer will step in and you’ll not have the opportunity to purchase that home.

For sellers only: If you’ve been thinking of selling your home, now may be a great time to put your home on the market. Buyers can now purchase for as little as a half-percent down payment with the new downpayment assistance programs combined with existing FHA loan programs, and many buyers are scrambling to take advantage of the federal first time home buyer tax credit. If you price your home right and have it in good showing condition, you’ll likely have more than one offer to choose from in less than a week after listing your home for sale.

Looking for a good Realtor? Santa Clarita Realtor Linda Slocum is a Certified Residential Specialist (CRS)  and a Certified Distressed Property Expert (CDPE) specializing in Santa Clarita residential real estate, bank-owned properties and short sales. You can reach her at 661.670.0349 or at homes@HoneyStartPacking.com.