Time is running out to get the tax credit put in place by the government to encourage homebuyers to act fast. If you are serious about buying a home in San Diego, you need to be proactive in order to meet the deadline. The tax credit is worth 10% of the home’s sale price, up to $8,000 for buyers who have not owned a home in the past three years. Up to $6,500 for buyers who have owned and occupied a principal residence for at least five consecutive years during the eight year period that ends on the day the new home is purchased. With the current time constraint on homebuyers, there are a few guidelines to keep in mind to move the process along, and ensure the benefits of the tax credit on your purchase.
The buyer must enter into a binding contract to purchase the home on or before April 30th of 2010. Since the term “binding contract” is not specified in the tax credit law, it may be open to interpretation. Therefore, there may be some flexibility as to whether the buyer qualifies depending on the terms of a signed agreement between both parties. The deposit check must also be in escrow.
Also, the purchase must close within 60 days after the binding contract deadline, so by June 30th. Certain U.S. military, foreign service and intelligence service personnel are entitled to an extra year to receive the tax credit. This gives until April 30th, 2011 and close by June 30th, 2011.
It is important to be clear with your Realtor what your “must haves” are on the home you are looking for. There is no time to be wasted, and you want the best pick of houses and options to choose from when the time comes. Some buyers have expressed concern about the length of the current housing market process. Circumstances such as the sale of the buyer’s current home, inspections, and financing can be covered with contract contingencies to allow for more time to tie loose ends, but should not be the reason for delay once the deal is pending. The homebuyer may want to include a contingency in the contract to ensure it will close before the deadline, and you still qualify for the tax credit.
Lastly, don’t leave anything until the last minute. Something unexpected may arise, and you want to have cushion room in that case. Make sure the homebuyer is pre-approved for a mortgage, have homeowner insurance lined up, and allow extra time incase there needs to be a second appraisal. Keep in mind that short sales often take longer because they require lender approval, and if you don’t have an answer by a certain date, you may want to look at another home.
Disclaimer: We are not experts on the homebuyer’s tax credit and recommend you consult a tax professional before beginning the process. This is strictly my opinion and not professional advice.
Nick Alameddin
Broker
C 760.802.4166
F 858.455.0100
DRE License #01426515
If you know anyone looking to sell or buy a home, please e-mail me their name & phone number. I will gladly get them a great deal and provide them bar none service.
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