$10,000 California HomeBuyer Tax Credit Starts May 1st – Act NOW!

April 3, 2010 by Jim Walberg · Leave a Comment

Finally, some good news from California State government!!! A new California law was JUST PASSED that now provides first time homeowners and long time residents of California an ADDITIONAL TAX CREDIT of $10,000 starting May 1^st – 5% of the home’s purchase value up to $10,000! This is a first-come first-serve pool of money that when it is gone, there will be no more credits available to home purchasers. The incredible benefit to California home buyers is this credit is ON TOP of the Federal credit provided to first time home buyers of $8,000. It also, applies to the long-time residents purchasing their next home, too. The home must close escrow between May 1st and December 31st, 2010. This means that those who OPEN ESCROWS before May 1st have the opportunity to not only receive the Federal tax credit of up to $8,000, but also an additional $10,000 if they close that escrow on or after May 1st! This is a credit to NOT pass up! This means if you are going to purchase a home in 2010 but are not quite ready this month, consider getting a home into escrow in April and close it on May 1st or after, so you can take advantage of this gift to California residents. I have found a link for you on the California Association of Realtor’s website for a side by side comparison of both the Federal and State tax law requirements that explains how the both work.

The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes. Eligible taxpayers who purchase and close escrow between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit. HOWEVER, when this pool of tax credits has run out there will be no more. And, I assure you that these credits will run out before December 31st!

For a California resident to take advantage of Federal tax credits, a first-time home buyer must enter into a purchase contract for an owner-occupied home before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010 to receive up to $8,000. Buyers who are NOT first-time home buyers may use the same time frames to receive up to $6,500 in combined tax credits if they are long-time residents of their existing homes as permitted under Federal law.

Remember, under the Federal law the federal tax credit expires on June 30, 2010, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. The new California law applies to home purchases that close escrow ON or AFTER May 1, 2010. ( Check out the California Revenue & Tax Code section 17059.1(a)(4) for all the details.) California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers wanting to combine the Federal and State tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits so be sure to consult your tax advisors.

Again, if you are planning on buying a home in 2010 as your primary residence, CONTACT ME, Jim Walberg, TODAY! Time is running out, and mortgage interest rates are starting to climb! Remember, the Feds stopped buying Mortgage Backed Securities two days ago. There are several factors as to why interest rates are climbing, but they are. They could be as high as 6% to 7% by the end of the year. Do you get the picture as to why taking action TODAY is critical? I look forward to hearing from you.