Below are the guidelines for both the Federal and State Home Buyer Tax Credits. The Federal tax credit expires April 30, 2010 (escrow must be opened by 4/30/2010), and the State tax credit covers homes that close escrow between May 1st, 2010 and 12/31/10 (or once the $200 million allocation runs out). Credits apply to both 1st time home buyers and existing homeowners (see details below).
Get Double Tax Credits! - Escrow that are opened by April 30th and also close escrow by June 30th will meet the time line qualifications for both tax credits, up to $18,000 combined.
Short Description:
Federal Tax Credit – $8,000 for 1st time buyers (not an owner in last 3 years) or $6,500 for non 1st time buyers of any home – Ends April 30th, 2010 – Credit is claimed in full on your next years federal taxes and in some cases can be claimed now.
California Tax Credit – $10,000 for 1st time buyers who buy any home or non 1st time buyers who buy a newly built home (described in the tax credit law as “properties that have never been occupied”). Credit is claimed in 1/3 increments ($3,333.33) for the next 3 years on your state income tax return.
Example:
A) 1st time buyer buys any home or condo in the proper time frames: They get $18,000 worth of tax credits/rebates.
B) Existing homeowner buys newly built home in the proper time frames: They get $16,500 worth of tax credits/rebates.
C) Existing homeowner buys a home that has been previously occupied in the proper time frames: They get $6,500 worth of tax credits/rebates.
Tax Credit Chart
| HOMEBUYER TAX CREDIT | FEDERAL | CALIFORNIA |
| Amount of Tax Credit | 10% of purchase price not to exceed $8,000 for First-Time Homebuyers or $6,500 for Long-Term Residents. |
5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.) |
| Date of Purchase | By June 30, 2010, but taxpayer must enter into a written binding contract by April 30, 2010. |
From May 1, 2010 to July 31, 2011, but an enforceable contract must be executed by December 31, 2010. |
| Principal Residence | Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121). |
Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218). |
| Type of Property | House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S. |
Single-family residence, whether detached or attached. |
| Eligibility | 1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence during the three- year period before date of purchase; OR 2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years. |
First-Time Homebuyer: Up to $10,000 if the buyer (or buyer’s spouse if any) has not owned a principal residence during the three- year period before date of purchase; OR 2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller. |
| Income Restriction | Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers). |
No |
| Maximum Purchase Price | 800,000. | No |
| Refundable | Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check. |
No |
| Repayment | No repayment required if the buyer owns and occupies the property for at least 36 months after purchase. |
No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase. |
| Multiple Buyers (not married to each other) |
Tax credit may be allocated between eligible taxpayers in any reasonable manner. |
Tax credit must be allocated between eligible taxpayers based on their percentage of ownership. |
| Maximum Credit for All Taxpayers | N/A | 100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis. |
| Reservations of Credit | N/A | Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive. |
| When to Claim | Full tax credit may be claimed on 2009 or 2010 tax returns. |
1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012). |
| Tax Agency | Internal Revenue Service (IRS). | Franchise Tax Board (FTB). |
| How to File | First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns |
Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law. |
| Other Restrictions | Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien. |
Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2. |
| Legal Authority | 26 U.S.C. section 36. | Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183). |
| Date of Enactment | November 6, 2009 (as revised). | March 25, 2010. |
| More Information | IRS Web site at
http://www.irs.gov/newsroom/article/ 0,,id=204671,00.html. |
FTB Web site at
http://www.ftb.ca.gov/ individuals/ |
