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Some of you are most likely concerned about the Federal Tax Credit for home buyers that is expiring on April 30th, 2010, which is just a few days away. You are even more concerned if you are in the middle of purchasing your home. Incase you were not aware, if a binding sales contract is signed by April 30, 2010, home buyers have until June 30, 2010 to complete the purchase. There are also special rules for those that are members of the Military, Foreign Service and Intelligence committee. Qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011. Also, a person who is forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside of the United States may qualify for the one-year extension. You can find out if there are any stipulations to this and what signifies "qualified" by going to www.federaltaxcredit.com.
If you haven't found that house you've been looking for and are worried that you are going to miss out on the Federal Tax Credit, don't fret, there is a California State tax credit for new homes and first time homebuyers that will go into affect as of May 1st, 2010. I've listed some information below and you can find out more by visiting the State of California Franchise Tax Board website http://www.ftb.ca.gov/individuals/new_home_credit.shtml.
2010 Tax Credit for New Home / First-Time Buyer
*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, these tax credits are 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. Taxpayers may apply for the tax credits if they have entered into a contract before May 1, 2010, as long as escrow closes on or after May 1, 2010.
*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. For example, if a taxpayer is allocated $10,000 for the New Home Credit, the $100 million cap for the New Home Credit will only be reduced by $7,000. If a taxpayer is allocated $10,000 for the First-Time Buyer Credit, the $100 million cap for the First-Time Buyer Credit will only be reduced by $5,700. The 70 and 57 percent reductions do not impact the amount that can be claimed by the taxpayer.
*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:
To get more information on this, please visit http://www.ftb.ca.gov/individuals/new_home_credit.shtml to find out more.