As you may already know, the first time home buyers tax credit has been extended and expanded. There have been some changes made to it that may now mean that you are now eligible to take advantage of it whereas before you couldn't.

So what exactly is the tax credit?

It is essentially a federal rebate of up to $8,000 if you purchase a home. As before, the credit is available for up to 10% of the purchase price of the home with a maximum of $8,000. You will need to have a contract signed by April 30^th 2010 with closing occurring no later than June 30^th 2010. The income levels for eligibility have been raised to $125,000 for single buyers and $225,000 for a married couple. First-time home buyers are still defined as those who have not owned a home in the last 3 years.

The expanded part of the bill now extends to homeowners who have owned and occupied a home for 5 out of the last 8 years. This gives them an opportunity to trade up although they don't necessarily have to do that, they can also trade down. The same timeline and requirements still fit as per first-time homeowners with the exception of the maximum limit being a $6,500.00 tax credit.

Ok so we know the facts but how does it work?

The actual steps in claiming the credit are rather simple. Find the home you want, put a contract on it before April 30, 2010, close on it before June 30^th, 2010, complete IRS form 5405 and mail it along with a copy of the HUD-1 Settlement statement (your Realtor can provide that) to the IRS and provided you meet the income and ownership requirements all you have to do then is wait to receive your rebate check in the mail.

So where's the catch?

The catch is in the timing. If you're a first-time home buyer then you can begin your search for a new home now and start the wheels turning on getting that rebate check but if you fall in the category of a move-up buyer, then other considerations come into play. The main one is that you currently own your home and have for 5 of the last 8 years so you're going to have to sell that home first before you can buy a new home.

Conceivably you could take on a second mortgage if you're oozing in cash or you're thick skinned at taking risks but given the current market is that a risk you want to take? I would never advise to clients that holding a double mortgage is a good idea. Unforeseeable expenses or events could easily topple your double mortgage duty.

So we need to consider what it's going to take to sell your current home first. The average number of days that a house is on the market in the Bryan / College Station area is 127 days. That's a whole lot of days. Here's the math: If you were to list your home today November 10^th, 2009 then realistically it could take until March 17^th, 2010 to sell it. Once sold you still have to look for a new home, make an offer, negotiate a signed contract, and arrange for financing, complete inspections, title searches, surveys and the appraisal. All of this stuff takes time. As your agent we can arrange everything for you so that it all runs smoothly but we can't stop time from slipping past. Remember you only have until April 30^th, 2010 to get in another contract. So from the date of closing your current home until you need to be in another contract you have 44 days.

Ok so you could start looking for another house before your current one is sold but then you run the risk of finding that perfect house only to have it sold out from under you because you're still waiting to sell yours. Or you could be in a contract long before the April 30^th, 2010 deadline only to have financing fall through because the house didn't meet inspection or appraisal value. Then you would have to start the search again, only now you have a lot less time.

So what can you do?

Well there's actually quite a lot that can be done. In order to meet the tax credit deadlines we would need to begin discussing the sale of your current home. We would need to develop and implement a marketing plan to adequately advertise your home so that we can succeed in beating the average days on the market. Our goal is to reduce the 127 day average thereby increasing your 44 day remaining time. We need to allow for preparing your home for sale by painting, completing minor repairs, cleaning and creating curb appeal so that it stands out from the crowd. We need to price it right and begin an aggressive Internet marketing campaign. We need to schedule open houses and use Connective Conor to help draw attention to your house. We can begin the pre-approval process for your new financing and as soon as you have a signed contract on your house then we can begin the search for your new home.

Can it be done?

All of this can be accomplished within the timeframe that we've been provided. It is necessary however that you as a current homeowner understand that in order to truly avail of the tax credit, sell your home for every dime it's worth and have enough time to buy the perfect home then you can never start too soon. So contact your Bryan / College Station Realtor who knows your market area and let them help you through the whole process.