By this time, you are probably aware of the two home buyer tax credits that were approved on November 6, 2009 but we wanted to give you the ‘fine print’ details.

The first is actually an extension of the $8,000 first time home buyer tax credit that was introduced earlier this year and originally set to expire at the end of this month. It has now been extended to include homes placed under contract by April 30, 2010 and closed prior to July 1, 2010. The rules are the same as in the previous legislation except that the income limit has been increased to $125,000 for single home buyers and $225,000 for married couples who file a joint return. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

A first time home buyer is defined as someone, including both partners of a married couple, who has not owned a principal residence for three years before the purchase. The credit is for 10% of the purchase price up to a maximum of $80,000 and does not apply to homes priced at more than $800,000 – usually not a problem for first time home buyers. Buyers do not qualify if they purchase from a lineal ancestor or descendent, including parents or grandparents and children or grandchildren or from a spouse or the spouse’s lineal relatives. You can claim the credit with a co-signer but not if you are claimed as a dependant on someone else’s return.

Taxpayers who claim the credit must use the home as a principal residence for the next three consecutive years. The credit is refundable which means that if the amount of income tax you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

All types of homes qualify including new or resale singe family detached and attached townhomes and condos. The tax credit can be claimed on either the 2009 or 2010 tax return. If you are determined to close on the purchase of a home prior to the June 30, 2010 deadline, you may consider adjusting your current withholding to give you more money each month to apply towards the down payment and closing costs.

The new $6,500 tax credit applies to repeat home buyers as long as they have lived in one residence for five consecutive years out of the last eight. The rules for income and timing are the same as for first time home buyers as well as the type of home. There is nothing that says the home purchased has to be worth more money nor is there anything that says you have to sell your existing home. If you retain your existing home, the home you purchase and claim the credit on must become your principal residence for the next three consecutive years.

There is a lot of additional information about the tax credits available on line. The National Association of Home Builders is sponsoring a good one at www.FederalHousingTaxCredit.com.

If you qualify, the tax credit is real money in your pocket and can be used to reimburse you for some of the expense associated with the purchase or provide funds for home improvement or for anything you can imagine.

It is very doubtful that the tax credit will be extended again, so if you are a qualified first time home buyer and have been considering the purchase of a home don’t wait and miss the boat. It can easily take a month or two to find the right home, you need to qualify for financing and it can take another six to eight weeks to close on the purchase of a resale home and longer if the home is under construction. Add in the holiday season coming up when most people are busy doing other things and it is easy to see – the sooner you get started the better. If you are a qualified repeat buyer who has been thinking about a the purchase of newer home or an older home, a smaller home or a bigger home, a new neighborhood or across the street, you just got a $6,500 gift, if you can make it happen. Most importantly, if you need to sell your current home to purchase another home, you need to get started today. Call your real estate professional and get the planning under way.

Last month we reported on the local real estate sales for September and noted the big improvement in sales for the month and for the third quarter compared to the previous six months. A few late reported sales actually turned September from a 1.7% decrease to a 2.9% increase and the third quarter ended up less than 1% down from the previous year. We also noted that almost 30% of the listings under $250,000 were under contract, no doubt many of them due to the $8,000 first time home buyer tax credit which was due to expire at the end of November 2009 and suggested that this could provide a nice boost for the final quarter and might carry us to a sales increase for the final quarter; something we have not had since the last quarter of 2006.

Well it happened! October home sales were up a very welcome 41.5% compared to last year and a lot of thanks has to go to the tax credit since almost 80% of these closings were for homes priced under $250,000 compared to a normal 65%. The average selling price was down slightly to $238,021 but that is welcome also compared to the 8.9% drop in September and the 10% drop in August. In the two months since the end of August the decrease in home sales has improved from 16.3% to 10.1% and the increased sales have come without a reduction in the average selling price.

 The 41.5% increase in the Fort Collins area sales for October also stands out compared

to our neighbors. The Loveland area reported 149 closed sales in October, just about even with the 150 last year and Weld County had 275 closed sales, a drop of 9.5%

The median price for October was $213,000 and is $210,000 for the year to date compared to $212,500 last year. Days on market for October closed sales averaged 112 days compared to 118 days last year and the inventory of homes for sale dropped 8.2% to 1,713.

And there is more good news. As of this writing, both the Senate and the House have passed a bill and sent it to the President extending the $8,000 first time home buyer tax credit all the way through to include homes placed under contract by April 30, 2010 and contracts closed by July 1, 2010. For those procrastinators or those who were not ready or not yet qualified this gives you another six months to take advantage of the $8,000. Plus the proposal would raise income limits for the credit to $125,000 for single buyers and $250,000 for married couples. It also appears that other home buyers will get a bonus as there is a $6,500 tax credit approved for home owners who decide to sell and buy another home, as long as they have owned their current home for five years. Naturally there is some fine print with both of these proposals that we will review as soon as the details are finalized.

On top of all this good news is that mortgage rates, which increased slightly over the last couple of weeks, are headed back down – and are again just under 5%. The decision of the Federal Reserve Open Market Committee at their meeting on November 4, 2009 to maintain the federal funds rate at 0 to 0.25% and to purchase a total of $1.25 trillion of mortgage backed securities will continue to provide support for mortgage lending. Coupled with the extended and expanded tax credit we expect the housing market to continue to improve.

Maybe it is time to go find the band wagon!