California Offers New Tax Credits to Home Buyers

Become a Tehachapi homeowner and let your house foot part of the bill!

If you thought you missed the opportunity to get in on the Federal Home Buyer Tax Credit, there’s still time!  As long as you have a purchase agreement before April 30, 2010 and close escrow by June 30, 2010, you are eligible for the Federal credit.  You can read a previous article with more information about the Federal credit and how it pertains to Tehachapi, Kern County area home buyers.

So, what’s new?  California has announced a tax credit available to new home / first time home buyers.  The Franchise Tax Board talks about the 2010 Tax Credit for New Home / First-Time Buyer in detail.  The 2010 credit is only available to buyers who purchase either a new home or their first home after May 1, 2010 and before December 31, 2010.  The new home purchase may be made as late as December 31, 2010 as long as escrow closes by July 31, 2011.

The California credits are limited to the lesser of 5% of the purchase price or $10,000.  It is important to understand that the credits will be paid out equally over a period of three years.  So, for example, a purchase of $200,000 or more would be entitled to the maximum total credit of $10,000, paid out at the rate of $3,333 per year.  A purchase price of less than $200,000 would use the 5% calculation, again spread over three years.

More good news — if you have a fully executed contract for purchase dated no later than April 30, 2010 you are eligible for both the Federal and California State credits.  If you are thinking about buying soon, this could affect your decision on timing!

As always, consult your legal or tax professional to see how this may fit with your situation.  Feel free to contact me if you have questions or would like to take advantage of the home buyer credit.