Central Station

The Bay Area's Newest Destination

Thursday, April 1, 2010

Timing is everything!


Governor Arnold Schwarzenegger signed legislation AB 183 to extend and expand the homebuyer tax credit. Authored by Assembly member Anna Caballero (D-Salinas) and Senator Roy Ashburn (R-Bakersfield), this tax credit will provide up to $10,000 to Californians who are buying their first home or purchasing a brand new home.

This legislation, part of the Governor’s larger California Jobs Initiative, will play a key role in getting our economy moving again by encouraging home ownership and stimulating job creation.

Governor Arnold Schwarzenegger stated:

“I have been up and down the state pushing this important housing bill that will get people off the fence and into homes… “

Some home buyers in California could get both federal and state tax credits worth up to $18,000 if they time their purchase just right over the next three months.

Want Both?

• Both credits require you to buy the home as your primary residence.
• Both define a first-time buyer as someone who has not owned a home in the three years prior to purchase.
To get both credits you must be in contract on or before April 30 and close between May 1 and June 30 - and meet all other requirements. For more information contact info@pclofts.com
• Buyers who are already in contract and want to postpone their closing need to get the seller and lender to agree.

Federal credit:

• The credit is 10 percent of the purchase price,
• up to a maximum credit of $8,000 for first-time home buyers or
• $6,500 for longtime homeowners who buy a replacement home.
• Either type of buyer can purchase a new or existing home.
• Buyers will be able to claim the federal credit when they file their tax return (or amend the prior year's return).
• This credit is refundable: The full amount will be paid out, even if you have zero federal tax liability or the credit is bigger than your federal tax.
• You cannot get the federal credit if your income is too high or the home was purchased after Nov. 6, 2009, and cost more than $800,000.

State credit:

• The credit is the lesser of 5 percent of the purchase price or $10,000.
• First-time buyers can purchase a new or existing home but repeat buyers can only purchase a new home that has never been occupied.
• The California credit is spread over three years, up to $3,333 per year.
• It is not refundable: If you owe less than $3,333 in one (or more) of those years, you lose the difference that year. Even if you owed $3,333 before you owned a house, you might owe less after because of all the new tax deductions.
• No income or purchase-price limits. Buyers who fall below the income limits for the federal credit might not owe enough California tax to get the full benefit of the state credit.
• You must close escrow between May 1 and either Dec. 31 or whenever the money set aside for the program runs out, whichever comes first.
• The money is likely to run out long before Dec. 31.
• You can reserve a state credit for new construction by entering into a binding contract between May 1 and Dec. 31 and closing before Aug. 1, 2011. People who do this won't get the federal credit because they entered a contract after April 30.

Buyers should consult a well-informed tax person and make sure they understand both credits.

Labels:

0 Comments :

Post a Comment

Subscribe to Post Comments [Atom]

<< Home