In an effort to stimulate the economy, California is offering first-time home buyers up to $10,000 in state tax credits.
In an effort to stimulate the economy, California is offering first-time home buyers up to $10,000 in state tax credits. Two different types of home buyer credit are available: credits for first-time home buyers and credits for home buyers opting for new homes. The credits are alternative credits, such that a home buyer qualifying for both must choose one or the other.
Gov. Schwarzenegger hopes the program will "get people off the fence and into homes," Mercury News reported.
With a 12.5-percent unemployment rate, the fifth highest in the nation, California plans to spend up to $100 million on the home buyer tax credit programs. These programs operate on a first-come, first-serve basis, and give home buyers 5 percent credit on the purchase price of a home, up to a $10,000 maximum. A similar program last year made home buyer tax credits available to more than 10,000 Californians.
To be eligible for the new credit, applicants must close escrow on or after May 1, 2010. It may take up to six months to be notified by the California Franchise Tax Board whether a tax credit is available, and any credit must be applied in three equal annual installments.
California Tax Credit for New Home Buyers
The California tax credit for new home buyers is intended primarily to encourage jobs in the construction industry.
The new home tax credit applies only to purchased single-family homes that have not been occupied previously. The taxpayer receiving the credit must be eligible for the home owner's exemption and must live in the home for two years immediately after purchase.
For the new home tax credit, taxpayers may make reservations indicating their intention to apply for a credit upon entering into an enforceable contract after May 1. The reservation expires two weeks after closing.
California First-Time Home Buyer Tax Credit
The conditions underlying the first-time home buyer credit are identical to the conditions for the new home buyer credit, but for the requirement that the home must never been occupied.
Taxpayers may not reserve tax credits under the first-time home buyer program.
According to the California Franchise Tax Board, taxpayers had already applied for $2.3 million of the $100 million allocated to the home buyer tax credits by May 4. Those interested in the program would be wise to act quickly, to avoid missing out on the tax incentives.
Article provided by The Mellor Law Firm - Visit us at www.mellorlawfirm.com
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