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Take this quick list of tax tips to your personal tax guru and cash in your check from Uncle Sam!

    1.  2009-10 First-time Homebuyer
     Tax Credit

• Who It Helps: Recent (or current!) homebuyers who had not owned a home in the 3 years prior to buying, but bought one in 2009 or this year (must be in contract on or before April 30, 2010).  Depending on when you bought (or buy! there’s still some time left!) income and purchase price limits may apply.
• How It Helps: Depending on your income and purchase price, you can receive up to an $8,000 fully refundable tax credit.  (That means if you were already getting a refund, you’ll get a bigger one!) You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.

• More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

• IMPORTANT NOTE: Per the IRS website, “because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405.”

    2.  2009-10 Move-Up Buyer Tax Credit

• Who It Helps: Current homeowners who have lived in the home they are selling, or have already sold, as their principal residence for five consecutive years of the last eight years who closed escrow between November 7, 2009 and July 1, 2010, so long as they are in contract on or before April 30, 2010.

• How It Helps: Eligible homeowners can receive a tax credit of as much as $6,500, depending on income. You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.

• More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

• IMPORTANT NOTE: Can’t e-file to collect this one, either - see #1, above.

    3.  Energy Efficient Housing Tax Credits

• Who It Helps: Homeowners who invested in making their homes more energy-efficient in 2009 and 2010.

• How it helps: Offers them a 30 percent tax credit on qualifying purchases of energy-efficient furnaces, windows and insulation.

• More Info: http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home#energy

    4.  Private Mortgage Insurance Deduction

• Who It Helps: Homeowners who bought a home in 2009, and put less than 20 percent down on their homes. These are the folks whose lenders required them to pay for PMI, or private mortgage insurance.

• How It Helps: Allows them to deduct the costs - upfront and monthly - of PMI.

• More Info: http://www.irs.gov/pub/irs-pdf/p936.pdf

    5.  The Mortgage Forgiveness Debt Relief Act 

• Who It Helps: Short sellers, owners who lost homes through foreclosures or had their mortgage balance reduced through loan modifications.
• How It Helps: Normally, when a loan is cancelled or forgiven through, for example, a short sale or foreclosure, the cancelled debt is transformed into taxable income - and the IRS comes looking for their cut.  Under this Act, qualifying mortgage debt forgiven through foreclosure, short sale or loan modification is allowed to be excluded from taxable income.  The forgiven mortgage debt must be a loan on your personal residence, and must be related to the purchase of your home (if you pulled a bunch of cash out and did a short sale on that mortgage, you might not qualify).

• More Info: http://www.irs.gov/individuals/article/0,,id=179414,00.html

On top of these above-and-beyond tax credits, deductions and exemptions, longtime and brand-new homeowners should also look forward to claiming meaty tax deductions for basic closing costs (origination fees, taxes and points - oh my!), property taxes and mortgage interest deductions.

As always, talk to your tax preparer to see if you qualify for any of these tax perks.  And don’t delay - the countdown to April 15th is on.

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Outlook and Forecast

With buyers returning to the market to take advantage of the discount home prices, government tax credits, and interest rates, the existing home market in California experienced strong sales throughout 2009. As expected, distressed properties generated more interest from buyers because of their deeply discounted prices, but many home sellers of non-distressed properties responded promptly and cut their price accordingly to stay competitive in the market.  Sales of all homes increased, inventory fell to below-normal levels, and home prices adjusted upward in response to tight inventory levels.

The State of the California Housing Market report takes a comprehensive look at these recent developments in the California real estate market and provides an outlook for 2010. In particular, the report examines the impact of the federal first-time buyer tax credit on home buyers, analyzes the sales trends of distressed and non-distressed properties, and takes a closer look at the surge in the share of FHA-insured loans.

Key Findings

• The share of first-time buyers surged from 35.9 percent in 2008 to 47.0 percent in 2009, and
   increased for the third consecutive year. The proportion of first-time buyers exceeded the long-run
   average of 38.6 percent, and the share was the highest since 1995 when more than half of all
   buyers were first-timers.

• The federal tax credit was a big factor in many first-time buyers’ decision to purchase a home, as
   69 percent of those surveyed said that the federal tax credit was either “very important” or “most
   important” in their home buying decision.

•  Many first-time buyers were interested in distressed properties with deeply discounted price tags.
   In fact, over half of all first-time buyers (51.3 percent) either bought an REO/foreclosed property
   or a short sale in 2009.

•  Low home prices not only encouraged first-time buyers to purchase their entry-level home, but
   also lured investors who wanted to add a piece of real estate to their portfolio. Home buyers who
   purchased their properties primarily for investment purposes and tax considerations increased
   from 14.0 percent in 2008 to 16.8 percent in 2009.

•  Prices of distressed properties fell more sharply in 2009 than did prices of non-distressed
   properties. The median price of distressed properties declined 24.2 percent from $330,000 in
   2008 to $250,000 in 2009, while the median price of non-distressed properties dropped 10.4
   percent from $541,000 in 2008 to $485,000 in 2009.

•  Sellers who planned on purchasing another home, or had already bought another home, declined
    from 43.1 percent in 2008 to 39.4 percent in 2009. The share of home sellers who expressed an
    intention to repurchase peaked at 74 percent in 2004 and has declined in each of the subsequent
    five years.

•  The rapid growth in FHA-insured loans continued in 2009, with its share of total first mortgages
    soaring from 18.9 percent in 2008 to 32 percent in 2009. VA loans, meanwhile, adjusted slightly
    upward from 2.7 percent in 2008 to 4.7 percent in 2009.

•  One-third (32.9 percent) of all sellers sold their home with a loss in 2009, a jump from the 22.2
    percent recorded in 2008. It was the highest on record since C.A.R started tracking net cash
    losses, and was more than triple the long-run average of 9.3 percent.

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