Details on the 2010 California Tax Credit were released today, click here for the link to the ftb.gov website for the whole package:
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
Here are the highlights:
The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010.
Applying for the 2010 New Home/First Time Buyer tax credits: Applications must be submitted after escrow closes. The new application will be available by May 1, 2010. We will deny the application if the 2009 form is used or if we receive the 2010 application before May 1, 2010.
General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, the New Home Credit is available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. The purchase date is defined as the date escrow closes.
These tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence. Taxpayers must apply the total tax credit in equal amounts over 3 successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits cannot reduce regular tax below tentative minimum tax (TMT). The tax credits are nonrefundable and unused credits cannot be carried over.
The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. However, since many taxpayers will not be able to utilize the entire tax credit, the legislation specifies that the $100 million cap for the New Home Credit will be reduced by 70 percent of the tax credit allocated to each buyer and the $100 million cap for the First-Time Buyer Credit will be reduced by 57 percent of the tax credit allocated to each buyer. We will allocate the tax credits on a first-come, first-served basis.
Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.
Taxpayers will not be eligible for either tax credit if any of the following apply:
- The taxpayer was allowed a 2009 New Home Credit.
- The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
- The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
- The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.
First-Time Buyer Credit: A qualified principal residence, for purposes of the First-Time Buyer Credit, must:
- Be a single family residence, either detached or attached.
- Be eligible for the California property tax homeowner’s exemption.
- Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.
A first-time buyer is any individual (and the individual’s spouse/RDP, if married) who did not have an ownership interest in a principal residence during the preceding 3 year period ending on the date of the purchase of the qualified principal residence.
If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes.
Claiming the tax credit:
- The taxpayer must receive a Certificate of Allocation from us to claim the tax credit on their California personal income tax return. The Certificate of Allocation will state the maximum amount the taxpayer can claim listed by tax year.
- The taxpayer should refer to the 2010 New Home / First-Time Buyer Credit Publication for instructions on claiming the tax credit (the publication will be available by December, 2010).
- Special rules apply to married/RDP taxpayers filing separately, in which case each spouse/RDP is entitled to one-half of the tax credit, even if their ownership percentages are not equal. For 2 or more taxpayers who are not married/RDP, the tax credit amount will have already been allocated to each taxpayer occupying the residence on their respective tax credit allocation letter.
- If the available tax credit exceeds the current year net tax, the unused tax credit may not be carried over to the following tax year.
- The tax credit may not reduce regular tax below TMT.
- The tax credit is not refundable.
- Any disallowance of the tax credit may not be protested or appealed.
My reaction is still the same:
http://www.youtube.com/watch?v=HY-03vYYAjA
Smithers,
To respond to your previous question about listing agents lowering their list price to match the sales price at closing?
Yes, I see it a lot too, and don’t understand why they think they are getting away with something. The listing history is available to all MLS participants, and the evidence is clear. Plus they better have the required list price reduction form signed by the sellers to do it, and if they don’t, they deserve to be kicked out.
$100 million for each credit, first come first serve. No sustainable plans or ideas – just shamelessly throwing money at it.
So if I don’t pay federal taxes(low income) to the government that money is lost. The 10k only applies to tax money you owe to the government. Guess I’ll just wait until the tax credit expires again. No point in wasting my large downpayment. My large downpayment is all I have, and cannot risk buying a house that would wipe out my downpayment equity.
well maybe I should have waited another year to score off this handout, but who could have seen this coming? I’m happy to get the 8k that I didn’t even expect to qualify for.
*washing blood off hands for taking gov’t handout taxpayer $$*
No income limit??!!!
I should add that at least two of the !! in my previous post are because this means I may actually be able to qualify. Not sure if I’d want to jump in this feeding frenzy, but nice to know at least Arnie doesn’t discriminate against the job creators.
-Erica
Not fair for the people who are buying before May 1 🙁
Alex-just delay closing until after May First. You can sign a contract before then. In fact, to get the double cheeseburger with the Fed credit, you have to sign the contract before then but close afterwards.
JtR:
Thought so. A ratio of “sales price to listing price” taken from MLS data is meaningless at best. I assume the agents do this in order to (falsely) claim to prospective customers that they are able to get the listing price out of buyers(?)
Can someone please confirm that there is no income limit or property price limit?
There isn’t a direct income limit, but there is a restriction that you can only apply the credit to taxes above your “tentative minimum tax” from Schedule P of your California taxes.
So if you’re in a situation where you get hit with the California AMT, you won’t be able to get a tax credit at all, and even if you’re not, you might only get a portion of the tax credit. I’m no tax expert, so I’m not really sure how common this would be. I think most people are more likely to get hit with federal AMT than California AMT, though.