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Eye On The Market

Mainstreet strives to provide our clients with timely and relevent market information, giving buyers and sellers as much of an advantage as possible when deciding on their next move.  With this information, investors can more accurately evaluate and re-assess their real estate portfolio and "catch" the market at the most opportune time.

Below is a frequently updated list of hot market issues affecting buyers, summarized in quick and easy-to-read language.  For details of any topic, please feel free to contact us anytime.

  • Dec. '09How to Use Three New Tax Credits

    If your thinking of aquiring your first home, or even an investment property, you may be able to use one or two of the new tax credit incentives passed by federal and state laws in 2009.  Compound these with the current low interest rates, foreclosure prices, and eager sellers, may signal a perfect time to finally get into the market or expand your portfolio.

    American Recovery and Reinvenstment Act 2009 has two Federal credits:

    For 1st-time Buyers

    • Effective January 1, 2009 to April 30, 2010.
    • Credit of 10% of property's value up to a maximum of $8,000.
    • Not owned a principal residence during the 3-year period prior to the purchase.

    For Repeat Buyers

    • Effective November 6, 2009 to April 30, 2010.
    • Credit of 10% of property's value up to a maximum of $6,500.
    • Must have owned and lived in previous home for 5 out of 8 consecutive years.

    California has offered its version of a tax credit:

    For New-Home Buyers

    • Effective March 1, 2009 to March 1, 2010.
    • Purchase of newly contructed homes only.
    • Credit of 5% of sale price up to a maximum of $10,000, whichever is less.
    • Credit is given over a three-year period.

    Of course, further limitations and requirements apply for each program such as income levels, purchase price, timing, etc. You can find more information here and here. There are also numerous other resources online.

    How do these credits benefit an investor?

    Most government programs, including the credits above, are to stimulate and support primary residence purchases - The property must be for primary use, not an investment.

    However, an investor can still make use of these credits.  For example:

    A. If you're a repeat buyer purchasing a multi-family property, such as a duplex, claim AND live in one of the units (50%).  If your 50% home value is still over $65,000, then you will still qualify for the entire $6,500 credit amount (10% of $65K).

    B. If you are a 1st-time buyer AND want to start your real estate investment portfolio at the same time, this will work much the same as the previous example, only your credit will be up to $8,000.

    C. Tap both the California credit with the federal, and you could be looking at up to an $18,000 credit.  As of November 2009, the state credit has run dry, however lawmakers are thinking of re-funding the program with additional money.

    Mainstreet Properties can help you with choosing the best investment property for your purchase, while also utilizing the benefits of a tax-deferred 1031 Exchange.

    The following information only provides basics about the tax credits. We strongly encourage you to consult a qualified tax advisor or legal professional before any transaction.

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