$18,000 in Buyer Tax Credits for California Buyers – Time is Running Out Fast

Last week Governor Schwarzenegger signed AB 183 which provides $200 million in tax credits for home buyers. 

 California Tax Buyer Credit

• $100 million for first time buyers
• $100 million for buyers of new homes or homes that have never been occupied – don’t have to be first time buyer
• Homes must be principal residence of buyer
• Must close on home on or after May 1, 2010.
• Buyer must be in escrow/have a valid contact to purchase the home no later than 12/21/10 and close no later than 8/1/11
• Credit is 5% of purchase price up to a maximum of $10,000
• Buyers must live in home a minimum of 2 years or they must repay credit.
• First time buyers are defined as those who have not owned a home in the last 3 years.
• Tax credit is applied over 3 years – $3,333 each year.

It would appear that California buyers have plenty of time to take advantage of this credit.  However, the last California tax buyer credit ran out of money months before the deadline, and this may happen again this time.

Further, a first time buyer or longer term owner in California could take advantage of this new credit to combine it with the Federal first time tax buyer credit.

Federal First Time Buyer Tax Credit

• Buyer must be in escrow/have a valid contract to purchase the home no later than April 30, 2010.
• Must close escrow/close on the house no later than June 30, 2010.
• May not have owned a property in the last 3 years.
• Maximum income of $125,000 for single tax payer and $250,000 for married couples filing jointly for full credit.
• Purchase price of $800,000 or less.
• 10% of purchase price up to $8,000.

Federal Long Term Homeowner Tax Credit

 So, how do you take advantage of both tax credits?

• Have an offer accepted on a home no later than April 30, 2010
• Close on the home no sooner than May 1, 2010 and no later than June 30, 2010.
• Meet all other requirements for the tax credits.

What do you need to do to ensure that you are under contract no later than April 30, 2010?

Call me at 714.319.9751 as time is running out.

 We are not accountants nor CPAs and are not providing tax advice. Please speak with your CPA and/or accountant to confirm that you qualify for these tax credits.