The Internal Revenue Service (IRS) has its new guidelines on how to ensure you get either the “first time” home buyer or “repeat” buyer tax credit.There’s specific documents your Tax Advisor needs to submit in order to get it!

If you forgot, the federal tax credit for home buyers was extended and expanded late last year, and will be for good either first time home buyers or repeat buyers that purchased and closed their escrows by April 10, 2010. Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 and repeat buyers may be eligible for a tax credit of up to $6,500.

To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405.  On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date.

The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place. The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.”  However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement.  As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it.

One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years. Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.

I’ve included the link below so that if you’re doing it yourself, you can look into it or you can forward the link to your Tax Advisor.

First-Time Homebuyer Credit: Answers

San Francisco is among the most expensive cities in America, and for most renters, considering becoming a homeowner seems unrealistic, if not, impossible.

The city of San Francisco understands many of the renters concerns and they have many programs that assist renters in the pursuit of homeownership. I meet and speak with a lot of people who are ‘curious’ with the market and that they would love to be able to afford a home, but that’s its difficult with the home prices so high.

I’ve met some people who work two jobs, some have parents who “gift” them money for a down payment, and I’ve spoken with other real estate advisors and they’ve seen groups within a family pull their money in to afford one single family home. It’s crazy – I know.

So that brings me to the Mayor’s Office of Housing (MOH), which has several programs like their Below Market Rate homes (BMR), their Down Payment Assistance Loan Program (DALP), or their Teacher Next Door Program (TND) among other programs.

An example, a 1 Bedroom, 1 Bathroom Condo in Diamond Heights typical sells for $470,000, but under the MOH’s Below Market Rate program, a comparable home (95 Ora Way # 101F) that is currently in the market is asking for $217,845. That’s a BIG difference!

There are of course some draws and requirements when purchasing a BMR from the city – one major issue is that homes bought within the program can not be sold for gain when a homeowner resells it back out in the market – so appreciation may not happen and should not be expected. The program’s concept is for renter’s to become homeowners, and it can only be sold and bought by individuals within the program.

This is a peak at something that most renters may not know about, but should. Explore your options, be knowledgeable with what programs and services are available and, hopefully, you won’t feel like homeownership isn’t just for the rich or for the lucky ones who bought 10-20 years ago.

If you have any additional questions, feel free to contact Michael directly, 415.680.8031.