$10,000 California First Time Home Buyer Tax Credit – Starts May 1, 2010

April 11, 2010

Loans & Mortgages

$10,000 California First Time Home Buyer Tax Credit – Starts May 1, 2010

NOTE: Please read the comments section about the 14-day limit for filing!!!

Assembly Bill 183, The Home Buyer Tax Credit – Keep in mind, folks, that this is a California First Time home buyer tax credit, not a Federal first time home buyer tax credit that expires at the end of April, 2010.   The CA tax credit existed in 2009, but it only applied to the purchase of brand new homes.  This year, it was extended to new and previously owned homes.

AB 183 was passed by the legislature on March 22 and gives the Franchise Tax Board authority to extend a total of $200 million in tax credits to California homebuyers; $100 million for buyers of new, Assembly Bill 183, The Home Buyer Tax Credit unoccupied homes and another $100 million for first-time buyers of existing homes. California First Time home buyer tax credit will be extended from May 1, 2010 to December 31, 2010.

The fist time home buyer tax credit will be available to buyers on a first-come, first-served basis and is applied in equal amounts over a period of three taxable years.  To qualify, the buyer must not be a dependant and must purchase a home that does not belong to a relative.

Eligibility/qualifications requirements:

  • The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit.
  • The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).
  • 40% of first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered, according to the California Association of Realtors research conducted in 2009.
The previous california first time home buyer tax credit program was so successful that it ran out of tax credits by the end of June 2009, eight months before it was set to expire and just as housing markets appeared to be turning a corner.  Unlike last year’s legislation, AB 183 adds a tax credit for the purchase of an existing home by a first-time home buyer.

You have to get a pre-approval letter before you start viewing homes in person, since most sellers won’t even allow Realtors to submit offers without a pre-approval letter.   Lending requirements and criteria has changed a lot in 2009 and 201o.  The smart thing to do is to get your financial plan in order in the beginning.  Then, you know how much you qualify to purchase which creates a greater confidence for you and gives you an advantage other buyers when you are competing for a property.  If you need a few good lender referrals, call us at 310-528-5789.
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2 Responses to “$10,000 California First Time Home Buyer Tax Credit – Starts May 1, 2010”

  1. lichmc Says:

    *** TAX Credit AB 183 violates first-come, first-served basis***

    The AB 183 statement: “The tax credit will be available to buyers on a first-come, first-served basis and is applied in equal amounts over a period of three taxable years.”
     
    At that time most people believed that it would be the same as  IRS Credit for first time home owner.
     
    I bought my first home and closed escrow account on 05/19/2010.  My realtor as well as the escrow employees did not know about this 14 days limit to submit the application. No body told me about that until I visited FTB website on 06/07/2010. Even though, it was 5 days late, I faxed my application on that day. And my application was denied.
     
    I believe it is unfair practice. It is unfair because it is not a first-come, first-served basis as the law said.  I submitted application and bought a house first, but my application was denied because 14 day limit. Whereas, other homeowners bought a house after me and submitted application after me, but their application were approved.
      
    FTB should announce clearly and widely on radio, TV, not only on its website and should allow the time enough for the information reach the recipients.   
    FTB should do more and clear because normal people may assume it is the same as IRS.  Moreover, two-week limitation is too short .

    What do you think if the Right to speech have a limit “you cannot critize the government?” like Chinese communist?
     
    If you visit this web site on 03/26/2010 you can see no info about 14 days limit law of FTB.
     
    http://california.realestaterama.com/2010/03/26/governor-schwarzenegger-signs-10000-homebuyer-tax-credit-legislation-ID0583.html

    FTB 14 days annoucement
    http://www.ftb.ca.gov/individuals/new_home_credit.shtml?WT.mc_id=HP_Feature_HomeCredit_Hed

  2. Angella Says:

    I’m sure if you contact the responsible authorities, they’ll say “first-come, first-serve” for those who applied properly and got approved … which sadly eliminates about 90% of those who applied, because most people are not even aware of the 14-day policy. I know I wasn’t, because it was not originally released with the initial $10,000 California First Time Home Buyer Tax Credit credit announcement.

    Thanks for making everyone aware of the 14-day limitation, and for providing the links. Hopefully, others will benefit from having correct information.

    Angella Raisian @ http://AngellaRaisian.com

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