Friday, May 14, 2010

California Home Buyer Tax Credit Monies May Run Out Fast


In fact, wait until June, and you might be too late. The tax board has estimated that the tax credits will probably run out by June 30. They have good reason to think that. Last year, while the tax credits were technically available until March 1, 2010, they ran out July 2, 2009. Schwarzenegger had signed that tax credit into law in February of 2009.

Here are this years highlights:


The program:

California plans to spend around $200 million dollars to fund this tax credit.
This is twice as much funding as the state’s previous home buyer tax credit, which was rolled out in March 2009 and exhausted by July 2009.
Who is eligible?

The home buyer must be a California taxpayer.
There is no limit on the income of the home buyer.
The program is available to both existing homeowners and first-time home buyers.
Current homeowners are eligible only if they buy a newly-built home.
First-time home buyers are eligible whether they buy a newly-built or existing home.
To be a first time home buyer, you cannot have owned a home anywhere in the world during the three years prior to buying your new home. If you’re married, that applies to your spouse as well.
How much is the credit worth?

The tax credit is worth up to 5% of the purchase price of the home, or $10K, whichever is less.
How does the home buyer receive the tax credit?

The payment is credited against the home buyer’s annual CA state income tax.
The total payment will be spread evenly over three years.
If you qualify for the full $10K, you’d get up to $3,333 per year – but only if you pay at least that much in annual CA state income tax.
If your CA state income tax is $4,000 a year, you get a $3,333 credit against that amount, effectively lowering your state income tax to $667.
If you owe less than $3,333 per year in CA state income tax, you’ll receive a tax credit only for that amount. The extra will not roll over into the following year’s payment.
The credit will begin to be applied to the tax year in which the home was purchased. If you buy your home in 2010, the tax credit will begin to be applied against your 2010 taxes.
You cannot apply the tax credit to your 2009 taxes, even if you file your 2009 taxes after you purchase your home.
What’s the deadline for claiming the credit?

Buyers of existing homes must close escrow between May 1 and December 31, 2010.
Buyers of new homes can either:
Close escrow between May 1 and December 31, 2010, or…
If they are unable to close escrows during that time, they can reserve a credit by entering into an enforceable contract between May 1 and December 31. They must then file the proper paperwork with the tax board and close escrow by August 1, 2011.


Applications
Will be acceppted by fax only beginning May 1, 2010. Applications received before escrow closes will be denied
Within two weeks (14 calendar days) after the close of escrow:
The seller must complete Parts II, III, and also Part IV (if the home has never been occupied) of Form 3549-A, Application for New Home / First-Time Buyer Credit, and provide a copy to the buyer or escrow person.
The buyer will complete Parts I, V & VI of Form 3549-A.
Fax the completed Form 3549-A and the final settlement statement (generally the buyer's HUD-1 statement) to FTB at 916.855.5577. It is best that the escrow company, on behalf of the buyer, fax the completed application and settlement statement to FTB and provide a copy to the buyer. (The buyer retains ultimate responsibility to ensure the completed application and settlement statement are submitted timely to the FTB.)

Kathy Fontana
Lic#01474065
Marlene Arimura Mortimer
Lic#01456323
"We Take You Where You Want to Be...HOME"!
(805) 479-0343
(805) 890-4414
www.C21KathyMarlene.com
info@C21KathyMarlene.com

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