A brief explaination of the 2010 California Tax Credit for First Time Buyers and New Home Purchases
Posted by Bruce Wagg on Friday, April 23rd, 2010 at 2:41pm.
2010 California Tax Credit for First Time Buyers and New Home Purchases
California has a new tax credit for New Home and First-Time Buyers who buy a home that closes May 1, 2010 to Jan 1 2001. A more realistic end date is until they run out of the $100 million budget. This might not be very long as the 2009 credit ran out of funds quickly. The credit could stimulate some home purchases in the lower-end Oakland real estate market but I am not sure if it will have much effect on Piedmont homes for sale.
The state credit is slightly different from the $8000 Federal Tax Credit that will expire at the end of this month. The refundable federal credit went directly to the buyer when they filed federal income taxes. The non-refundable California credit will be a credit towards California income taxes due and is spread over a 3 year period with a limit of $3,333 per year. You will need to have a healthy income tax bill to use up the credit every year. As an example, if you pay $2500 in California taxes in 2010 you will get a check back from the state for $2500; if you pay $150 in taxes you will get only $150 back. If you are a first time home buyer you might not be paying a whole lot of California taxes once you deduct the interest payments. The state is banking on the fact that not every buyer will be able to use all of the $10,000 credit.
Only one credit will be allowed per buyer and requirements including being over 18 and not being a dependent of another taxpayer in the year of purchase. To qualify for the New Home or First-time buyers credit, the home must be occupied by the buyer as their principal residence for a minimum of 2 years.