Thanks to Mark for sending along this confirmation of first-time home buyers being able to claim both the federal and state tax credits, from the WSJ:
But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)
For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”
He estimates the tax credit will benefit about 14,000 new-home buyers, lasting as long as five months. KB Home and Lennar could benefit the most given “their outsized exposure to California at 44% and 25% of ’09 revenues, respectively, vs. the 20% group average.”
Given that the state’s existing sales dwarf new sales – 2009 saw an average of 42,500 closings per month – that allotment should be snapped up in about a month. Stampede, indeed.
Yes, but both credits are only for first time home buyers. How many first time home buyers are part of that monthly figure?
Chuck
Dang, I might consider that deal if it extended to move-up buyers.
Is there an income limit on the state tax credit? I don’t qualify for the federal.
Not that a 2% discount will likely sway me. If the sellers aren’t going to “give it away” then the gov’t eventually will. Look for more of this down the road.
Genius the federal had expanded income qualifications after the November 09 redux.
Are you sure you didn’t qualify? Because, if that’s the case, you have nothing to worry about.
You can buy more houses in the future with your income.
Chuck
Didn’t realize there was a phase-out range with the expanded income qualifications. Even with an income of $145k I still wouldn’t be able to touch anything reasonable within 5 miles of me.
We’ll see what the future brings.
Chuck Ponzi-Not quite. You can get a $6,500 Fed credit if you aren’t a first time buyer, and if you buy a newly constructed house, you don’t need to be a first time home buyer to get the state $10,000 credit. So, if you aren’t a first time buyer (which for the Feds is defined as not owning a house in the last three years, not never-and owning a vacation and/or rental properties don’t disqualify you, only owning your principal residence does-not sure if the rules are exactly the same for the state) and buy a new home, you can double dip too. There are income limits for the Fed credit though-again, dunno about this new state one.
Wait-I thought of something else. What if you are a first time home buyer who buys a newly built house? Do you get both $10k credits? Add in the Feds, and do you get $28k?
I know there are income limits for the Fed tax credit, but what about the State?
The Mercury News article said the State credit would be up to $10,000 “over three years”, so what happens if your income goes up substantially in the ensuing years?
Are you now ineligible?
No income limits for the state tax credit. If you are both a first-time home buyer and you are buying a new home, you get just one tax credit, and it comes out of the $100m allocated for buyers of new homes.
You can also reserve your credit before you close if you enter into a contract on or after May 1.
Here’s the bill:
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_183_bill_20100322_enrolled.html
It’s pretty short, so it’s not too bad to read.
Just FYI, but the term “first time homebuyer” is misleading. It includes those who haven’t owned a home for several years, as well as those who own a rental but not a primary home. Don’t believe me? Read the official criteria on IRS and it goes out of its way to say so.
As for the $150K to $170K phaseout for married couples, that’s for MAGI. So any 401K contributions will lower your income for this criteria.
Lastly, you must file by mail and can expect about a 2 month delay to get your return.
Although $8K should not make you change your mind about buying, it isn’t so much a “2% discount” as down payment assistance (ex. 10% of your down payment). It’s a significant difference for some buyers because of key thresholds needed to lower your interest rate and avoid certain fees.
Rather, if you wanted to buy around this time, the $8K is important to factor because you may not want to miss the deadline by one or two months. So it’s worth knowing about if you intend to buy now.
Another thing I learned while doing my taxes is that the 3/4% fee they charge for buying a townhouse with only 20% down is deductable as points paid.
I just love how they made up so many new rules in just the span of two years. At least they’re no longer changing the rules every day, just every few months.