The New California Home Buyers Tax Credit Bill (AB 183)

New California Home Buyers Tax Credit Bill has been published. It is very much like a previous tax credit bill and hopefully it will help to stimulate existing real estate market.

Video transcript below:

Funds:

State of California Allocates $200 million dollars for home buyer tax credits.
$100 million for qualified first-time buyers of existing homes
$100 million for buyers of new, previously unoccupied homes

Tax credits allocated on first come first served basis

Terms:

To receive tax credits all eligible tax payers who have purchased qualified property within this time period:

May 1^st, 2010 through December 31^st, 2010
All sales must be closed before August, 1^st, 2011
All home buyers are required to live in their new homes for at least two years, failure to comply results in forfeiting the credit and the liability to repay.

Credit Amount

The credit is equal to the littlest of 5% of the purchased home price or $10,000.

For example, if you have purchased a property for $100,000 your tax credit is equal $5,000. Credit is granted in equal installments over three consecutive years, maximum of $3,333 per year

It is recommended you consult your tax professional before taking advantage of this offer.

Eligibility

Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies to allocate the amount under the New Home Credit.

Taxpayers will not be eligible for either tax credit if any of the following apply:
The taxpayer was allowed a 2009 New Home Credit.
The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

New Home Credit: A qualified principal residence, for purposes of the New Home Credit, must:

Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit.
Be eligible for the California property tax homeowner’s exemption.
Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.
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Get more info on the AB183 from California State Franchise Tax Board