New $10,000 California Homebuyer Tax Credit Signed by Governor

Online, April 15, 2010 (Newswire.com) - ï® The $100 million cap on the 2009 tax credit was quickly reached as many new homeowners applied for credits within the first few months of the 2009 program. AB 183 will provide an additional $200 million in tax credits ($100 million for new homes and $100 million for first time homebuyers of existing homes). There are no income restrictions for buyers in the new program.

ï® The program applies to buyers of new homes and first time homebuyers of existing homes with sales contracts signed between May 1, 2010 and December 31, 2010. Any home under contract by the December 31, 2010 deadline has until August 1, 2011 to close escrow.

ï® The May 1, 2010 commencement date comes one day after the expiration of the $8,000 federal tax credit for first time homebuyers.

ï® Qualified purchasers will receive a tax credit for 5% of the home's purchase price, up to $10,000, spread equally over three consecutive tax years.

ï® Homebuyers must live in the home as their principal residence for two years after the closing.

ï® Like the 2009 program, there will be limited state funds, so the homebuyers must reserve the tax credit to qualify. Unlike the 2009 program, the new program allows the buyers to reserve the tax credit in advance of the home's closing.

ï® To reserve the tax credit the buyer and seller must jointly sign and submit to the California Franchise Tax Board a certification that they have entered into a sales contract between May 1, 2010 and December 31, 2010. If the buyer receives notice from the Franchise Tax Board of reserved tax funds, then within two weeks after the close of escrow, the buyer must provide further information and certifications to the Franchise Tax Board to obtain the tax credit.

If you have any questions or would like to know more about this new law, please contact Todd Struyk at WJB CalPacific Team.