Sure, I am a little late to the party, but better late than never.
Compliments of the California Association of Realtors (little R), I am able to offer a very nifty summary of the two tax credits which may be available to home buyers. The federal law allows a credit of up to $8,000 for first-time home buyers, while the state law allows up to $10,000 for buyers of new homes in California as long as the pot of allocated money holds out.
NOTE: The California Association of Realtors (little R) has said that I can reprint this material for non-commercial uses only. Since no money is changing hands, I think I am safe. If, on the other hand, I suddenly disappear, you will know what happened. In that case, gifts of chocolate and the latest People magazine would be appreciated while I’m doing hard time.
| HOMEBUYER TAX CREDIT | FEDERAL | CALIFORNIA |
| Amount of Tax Credit | 10% of purchase price not to exceed $8,000. | 5% of purchase price, not to exceed $10,000. Maximum tax credit for all taxpayers is $100 million to be allocated on a first-come, first-served basis. |
| Principal Residence | Yes. Property purchased must be the taxpayer’s principal residence. | Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes. |
| Type of Property | House, condominium, townhome, manufactured home, apartment cooperative, houseboat, house trailer or other type of property located in the U.S. | Single-family residence, whether detached or attached, condominium, cooperative project unit, houseboat, manufactured home, or mobile home. |
| First-time Homebuyer | Yes. The buyer (and the buyer’s spouse if any) must not have owned a principal residence during the three-year period before date of purchase. | No. The buyer need not be a first-time homebuyer. |
| Unoccupied Property | No. Property may have been previously occupied or not. | Yes. Property must have never been previously occupied as certified by the seller. |
| Minimum Occupancy Requirement | Must be the buyer’s principal residence for 36 months after purchase, otherwise credit must be repaid. | Must be the buyer’s principal residence for 2 years after purchase, otherwise credit must be repaid. |
| Income Restriction | Yes. Tax credit begins to phase out if modified adjusted gross income is over $75,000 (or $150,000 for joint filers). No tax credit at all if modified adjusted gross income is over $95,000 (or $170,000 for joint filers). | No. |
| Date of Purchase | January 1, 2009 to November 30, 2009 inclusive. (Note: A repayable $7,500 tax credit is available for purchases from April 9, 2008 to December 31, 2008. | March 1, 2009 to February 28, 2009, unless $100 million funding runs out. |
| 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 | The buyer need not repay the tax credit if the buyer owns and occupies the property for at least 36 months after the purchase. | The buyer need not repay the tax credit if the buyer owns and occupied the property for at least two years immediately following the purchase. |
| Multiple Buyers (not married to each other) | The $8,000 credit may be allocated between eligible taxpayers in any reasonable manner. | The $10,000 tax credit may be allocated between eligible taxpayers based on their percentage of ownership. |
| When to Claim | Full tax credit may be claimed on 2008 or 2009 tax returns. | 1/3 of total tax credit may be claimed each year for 3 successive years. |
| Tax Agency | Internal Revenue Service | Franchise Tax Board |
| How to File | IRS Form 5405 | FTB Form 3528-A |
| When to File | Form 5405 must be filed with 2008 or 2009 tax returns. | FTB Form 3526-A must be faxed by escrow to the FTB within one week after close of escrow and filed with the buyer’s 2009 or 2010 tax returns. |
| Exceptions | Acquisitions by gift or inheritance, acquisitions from related persons and buyers who are nonresident aliens. | Credit allowed is not a business credit. |
