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.|