Highlights of the 2009 First-Time Homebuyer Tax Credit

Recently, I have received many questions from prospective homebuyers about the 2009 homebuyer tax credit bill -- which provides $8,000 tax credit to first-time homebuyers for the purchase of their principal residence between January 1, 2009 and December 1, 2009. I wanted to share with you a very informative FAQ (http://tinyurl.com/b8mysm) from the National Association of Realtors (NAR) to address many of your questions and concerns about the details of the bill.

Here are some highlights:
- You must be a “first-time” homebuyer, which is defined as someone who has not owned a home in 3 years prior to the day of your 2009 purchase.
- The 2009 tax credit is refundable (i.e. IRS will send you a refund check if your tax liability is less the $8,000).
- The income restriction for a full tax credit is $75,000 for individuals and $150,000 for married couples.
- You may receive partial credit for income up to $95,000 for individuals and $170,000 for married couples.
- The home must be your principle residence and owner-occupied.
- You do not have to repayment 2009 tax credits; However, if you sell the property within 3 years of the purchase, your are required to pay back the full amount of any credit, including any refund you received from it.
- You can claim your 2009 tax credit when filing your 2008 tax returns by April 15, 2009.
- Close of escrow must occur on or before Dec. 1, 2009; if the property is under construction when purchased, you must occupy the home before Dec. 1, 2009.

How to Lower Your Property Tax?

This is no April Fool’s Day joke! When home values go south, one positive thing for current homeowners may be the chance to lower their property tax. You might have seen advertisements that offer to lower your property tax for a fee anywhere from $100-$300…don’t be fooled!!!… Did you know that you can lower your property tax for FREE (or just a small amount for filing fee)? And, it’s simple to do!

First, download the property tax appeal application from your county’s tax assessor office (see links below). Print out the form and complete the information about your property. You will be able to find all of the information needed on your property tax bill. Some counties websites allow you to submit the form online.

Secondly, you will be asked to provide three sales information of similar properties in your neighborhood in support of your claim. There are a number of ways you can search for this information if you are willing to spend hours on the Internet or go to County Treasurer’s Office to find public records. A much easier solution is to call up your favorite Realtor who has the information readily available for you.

There is specific time period which the application must be filed. Please be sure to check with your county’s assessor office. Generally speaking, the formal appeal period is between July and Septermber, some counties through November.

The appeal process may take anywhere from 4 weeks to 3 months depending on the volume the office is handling. It does not hurt to call and follow-up on the status from time to time.

If you choose to appeal your assessment, you must pay your tax installments in full by the appropriate deadlines; otherwise, you may incur penalties while the case is on appeal. If your appeal is granted, a refund will be issued to you.

For your convenience, I have listed the following links to the property tax appeal forms for counties in the Bay Area. Alternatively, you may Google “_____ county property tax appeal” – make sure you enter the official website of the county assessor’s office.

San Francisco San Mateo Santa Clara Alameda Contra Costa

For more details, here is a complete guide on California Residential Property Assessment Appeals published by California State Board of Equalization (Pub. 30).

Don’t forget… your second installment of property tax is due on April 10th!