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What You Need To Know About California’s New $10,000 Home Buyer Tax Credits

April 3rd, 2010 categories: Buying

$10k CA CreditAs you probably already know, California recently adopted a new first-time home buyer’s tax credit, which goes into effect for homes that close escrow after May 1. (This is different than the soon-to-expire federal tax credit.)

California actually authorized two separate home buyer tax credits: a $10,000 first-time buyer credit and a $10,000 new home buyer credit.

The state’s Franchise Tax Board released more details on both new credits a few days ago. Here are some important points:

1.The credit only applies for escrows that close AFTER May 1, 2010.

2. The state has allocated a total of $200 million — $100 million for each of the two credits. Once the money is gone, the credit goes away. Last year, the state offered a similar credit only for new home buyers and it was gone in less than 4 months.

3. If you’re a first-time buyer who’s buying a new home, you can only take the new home buyer credit.

4. In order to claim the first-time buyer credit, the FTB must receive the application and documentation within 2 weeks after escrow closes. Wait any longer and you lose the credit.

5. Since new home buyers often have to wait months until their home is ready, eligible buyers can reserve that credit ahead of time, in order to ensure that the money isn’t already gone by the time their home is ready for occupancy.

6. Both credits are only good on single-family residences. Condos and townhomes are okay, but not duplexes, triplexes, etc. (even if you plan to live in one of the units).

6. The maximum credit is $10,000 or 5% of the home’s purchase price, whichever is less.

7. The credit is payable in three equal installments for the 2010, ‘11 and ‘12 tax years. On a home priced at $200,000 or more, that works out to a maximum credit of $3,333 a year.

8. The credit in any tax year can’t exceed your actual tax liability. So if you qualify for a $3,333 credit but your state income tax for the year is only $2,500, then you only get to claim $2,500.

9. You can’t carry over any unused credits to future tax years.

There are a number of other conditions and requirements, such as that the buyer must be at least 18 years old and not claimed as a dependent by another taxpayer. And that the buyer or buyer’s spouse can’t be related to the seller.

Since everyone’s tax situation is different, for full details or information on whether you’d be eligible for either of these credits, be sure to contact your tax adviser or visit the FTB’s tax credit information page.

To find a single family home, condominium or townhome in Benicia, Vallejo or the rest of Solano County so you can be eligible to qualify for one of the tax credits, please visit our Home Search page. Or, Contact Us and we’ll be happy to assist you.

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This entry was posted on Saturday, April 3rd, 2010 at 11:30 am and is filed under Buying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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