California Legislature has passed Governor Arnold Schwarzenegger’s proposal (AB 183) to extend the $10,000 first time home buyer tax credit starting May 1, 2010 until December 31, 2010. He is expected to sign the bill soon.
The previous California tax credit limited to a total of $100 million for new home purchases only was exhausted eight months before the proposed deadline. The initial bill credited over 10,000 home buyers. The new bill appears to double the amount of assistance.
Highlights of New California Tax Credit
- $10,000 tax credit or 5% of purchase price (whichever is lower)
- “Qualified principal residence” means a single-family residence, whether detached or attached, that is purchased to be the principal residence of the taxpayer, is eligible for the homeowner’s exemption under Section 218, and has either never been occupied or is purchased by a first-time home buyer.
- New homes for any taxpayer and new/existing homes for first time home buyers
- $200 million in funds available on a first come, first serve basis
- Credit given in 3 equal payments to a taxpayer’s personal income tax returns over 3 year period
When additional information comes available and the bill is actually signed, I will post the updates.
This is an extremely rare opportunity to take advantage of the reduced prices in homes, 40 year low in interest rates and to receive an incentive back from the state of California. Now, is the time to make a move.
Frequently Asked Questions for California Tax Credit
Related Articles:
California Releases Guidelines for 2010 New Home and First Time Home Buyer Tax Credit
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Forms for Reference
2009 Form 3528 – actual form from last year – cannot be used for new credit – only use as a reference – DO NOT SUBMIT THIS!
FTB Publication on 3528 – after credit was exhausted, FTB released this
{ 34 comments… read them below or add one }
I purchased my first home in Sept. 2009; and have been located at this residence ever since. As a first time home buyer that didn’t get in on the first Tax Credit, am I elegible to apply for this one?
Hi Elton,
Unfortunately you will not be eligible for this credit. According to Assembly Bill 183 “purchases made between May 1, 2010, and on or before December 31, 2010, or on or after December 31, 2010, and before August 1, 2011″ are eligible. You’ve fallen in between the two state credits, but it sounds like you’re eligible for the Federal. Did you claim that?
Jonas
Jonas,
I closed Escrow on 2/26/2010. Am I eligible?
Thanks!
M.
Mariela,
You are possibly eligible for the Federal $8000 tax credit, but not for California. It’s for properties closing on or after May 1, 2010 until Dec 31, 2010.
Jonas
Jones,
Our expected escrow closing date is April 22, 2010. Are we going to be eligible for the credit if we change the closing date to May 1st, 2010? The bill says purchases made between May 1, 2010, and on or before December 31, 2010, does the date means the closing date or the signing of purchase contract date?
Thanks!
Betty,
I understand it to be the closing date, the day it is recorded with the county. It certainly doesn’t hurt to attempt it, that way you could be eligible for the Federal $8000 and state $10000, that is if you’re a first time home buyer.
Jonas
I don’t think Betty is eligible. My loan is closing on Apr 2nd, 2010 and I know I am not eligible for CA one. What I don’t understand is that if they extend then extend from previous expiration date (which was Mar 1st, 2010) or at least the coming month which is Apr 1st. I think we should call our congressman to look to make it effecitve from Apr 1st or Mar 2nd (because the previous expired on Mar 1st). I am sure they will look into this.
Sanjeev,
I appreciate your comments. The previous tax credit was amended and ended on July 2, 2009. They no longer accepted contracts after that date. The Mar 1st deadline was for the previous tax credit that expired 8 months before the end date.
The new tax credit begins May 1st. If Betty closes on her transaction after that date, she could be eligible. Looking at the Franchise Tax Board’s site today, they have finally given a date, March 30th, to have some answers posted. As of now, the majority of us believe it is the recording date of the purchase that counts, not the contract date.
You are not eligible because you are closing on April 2nd, but Betty may close on or after May 1st which puts her in contention.
I’ll keep an eye on it guys. Thanks for all the comments.
Hi. My husband and I are scheduled to close on April 29, 2010. We are first time homebuyers and qualify for the $8000 federal credit. We asked our lender if we could extend closing to May 3 or 4th, and was told yes–that we could use April docs to close by May 4th. Now our lender is saying we cannot close early May because we need to use May docs and but can close later in May–the problem is we have locked in a rate already and will have to pay a lock extension fee the later we close in May. The seller may also be leaving the country. We are doing a Fannie Mae loan. Is there any way to close in early May? Thanks!
Ginger,
I believe it is lender discretion with the way they handle docs, but here’s how I handle this. Get docs out on April 29th or 30th, sign, but then fund May 3rd and record 4th or 5th. A lender can ‘typically’ fund 5-6 business days into the beginning of a new month with the previous month dated docs. You would then be required to make your first payment June 1st. For them to come back and say it has to be later makes no sense whatsoever.
I don’t like calling out “who’s your lender” but in this case you should talk to a manager of the firm. If it’s a broker, either they could have their hands tied by the lender they are using or they just don’t want to accommodate. I do this type of closing all the time.
Let me know if you need additional help.
Jonas
Hello,
My wife and I qualify for the $10,000 new CA credit effective 5/1 based on the fact we have not had home ownership in the last three years. Everything I read in online news says that the credit will apply to “existing” homes for first time buyers. Though when I read the CA Franchise tax board guidelines for claiming this, it makes no mention to “existing” homes under the first time home buyer area. Only new home purchase.
Can you say 100% that we qualify for this if we purchase an existing home. Or direct me some forms? No one seems to know the exact guideline here.
Thanks for the help.
Steve
Steve Pus,
Good observation on the word “existing” not being present in the publications. The term is implied more than anything.
Take a look again at http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml and look at the requirements for First Time Home Buyer. A certification from the seller that the home has never been occupied does not appear.
Also, from Assembly Bill 183 – http://www.jonasloans.com/wp-content/uploads/2010/04/ab_183_bill_20100322_enrolled.pdf
“(3) In the case where a taxpayer is both a first-time home buyer,
as described in paragraph (2) of subdivision (b), and the purchaser
of a qualified principal residence that has never been occupied,
the Franchise Tax Board shall allocate that taxpayer their credit
amount from the one hundred million dollars ($100,000,000) for
qualified principal residences that have never been occupied.”
And lastly from Gov. Arnold Schwarzenegger’s media release on 3/15/2010 – http://gov.ca.gov/speech/14639/
“So my proposal is to extend that tax credit of $10,000 for the purchase on new and existing homes. We will offer a total of $200 million credit for homebuyers. We want to get people to buy homes again, that is the important thing. If it is new homes or for families that want to move up and go to bigger homes, in either case that tax credit is available.”
So hopefully this helps. I’ve spent many hours researching the tax credit, so I believe I do know the exact guideline for ‘existing’ homes.
Jonas
Hi Jonas,
Thank you so much for the response.
So since a cert from the seller that a home has never been occupied does not appear in the CA FTB requirements, I will take it as a yes that I do qualify for the $10,000 credit?
Thanks again,
Steve
Hi Jonas! Thanks for your help. I talked with my lender and they are looking into us closing early of May. The seller is planning on signing docs on April 20 because he might be leaving the country later that week. Do you think if the seller signs on April 20–for a scheduled close April 28 or 29, we can still use April documents for early May?
Hi Jonas
I am scheduled to have sign-off meeting on April 12 before 30-day rate lock expires on April 16. My lender said that it’s not possible to extend the rate lock until after May 1st. To delay the closing process, I will need a new rate lock and possibly a new appraisal report (as the existing report will expire on April 25). I will like to know if it is possible to sign-off and have all of the funds in Title company and then ask Title company to hold off on final closing date until after May 1st?
Hi Sandra,
I doubt it. The seller has a closing date and to hold title up until May 1st means they will not get their proceeds until recorded and closed. It seems like a lot of things to do to delay for a tax credit. Sounds like a case of timing.
Good luck to you Sandra.
Jonas
Hi Jonas,
My agent told me that all of his clients who were able to take both credits were not able to get mortgage rate as good as mine. So, no loss here. We finished sign-off yesterday as scheduled. Thank you very much for the reply.
Hi Jonas,
Does the federal tax credit expires on April 30, 2010? If I close my escrow on May 1, 2010 for the california credit, I won’t be able to get the federal tax credit, right?
thx
ken
Hello Jonas-
Thanks for all the great info.. I bought a condo in 2000 and sold it in 2006 and have been renting a house since while waiting the market out. I own some vacant land in Hawaii, but have not owned a residence since. Do you know if I would qualify for this CA tax credit of $10k? I know in the past that if you didn’t own for two years, you qualify. But I don’t see that verbage on this bill.
Thank you!!!
Hello Jonas-
Nevermind, I found the information I was hoping to find.
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_183_bill_20100322_enrolled.html
“(2) “First-time home buyer” means any individual, or individual’s
spouse, who had no present ownership interest in a principal
residence during the preceding three-year period ending on the date
of the purchase of the qualified principal residence.”
Jonas,
My husband and I became first-time home owners in July 2009. The house we bought was new…just finished being built the day of our walkthrough on July 24, 2009. When we filed our taxes this year for 2009, our CPA advised that the Federal monies ran out last year and so we would not receive the credit. We did file for the CA state tax credit of $8000 but by what I have seen, we should qualify for Federal. Is this correct and if so, how do we claim this now that our taxes have been filed? Thank you.
Hi Jonas:
Can you explain how we can get a full credit of $10,000? (Our purchase price is $320,000 and we understand that 5% of 320,000 is $16,000. The full credit is only $10,000)
However, it depends on personal tax return. It says: “Buyers can get up to $3,333 off their tax obligation in each of the three years after buying a house.”
So how can we know that we can get a full credit?
Thanks.
Hi Jonas:
I have just read this:
“As part of his job creation initiative, Governor Schwarzenegger will be signing into law an extension of the home buyer tax credit (up to $10,000) for residents of California. This tax credit is eligible to first time home buyers of the Inland Empire, Riverside, San Bernardino, Orange, San Diego, and Los Angeles counties who purchase new or existing homes between May 1st and December 31, 2010.”
Is it eligible for us to buy a house in Santa Clara county in CA?
Thanks,
Thu Le
Ken,
If you got into contract before April 30th and close before June 30th, 2010, you will be eligible for the FTHB Federal Tax credit. Looks like you have an opportunity to possibly take advantage of both state and Federal.
Hope this helps,
Jonas
Karen,
The Federal monies didn’t run out last year, the state did, right before you closed escrow on your home.
You purchased in 09 and should be able to claim the $8000 credit. If they’ve already been filed, amend them with a tax professional, preferably someone that is familiar with the forms to use.
Jonas
Thu Le,
First and foremost any where in California is eligible as long as you follow all the criteria. I just happen to market in southern California, but would be more than happy to work with you should you need a loan officer. We just may not have a chance to meet due to distance.
Also, to make sure YOU can take advantage of the tax credit, it’s best to get your CPA or tax preparer involved so they can take a look at your specific scenario. If we were working together I would take your documentation and send to my CPA for clarification or back to yours with examples of what we are trying to do.
hope that helps, call me or email me at jonas@jonasloans.com if you need more info.
Jonas
Hola, Interesante, no va a continuar con este artнculo?
Dougles
Where can i find the application to reserve the tax credit? I’m due to close Jun 3
Jonas,
We are currently in the process of buying our first home. The home owners signed the contract early April. However, we are still waiting on the bank to sign off. Are we still able to qualify for the FTHB Federal Tax Credit or would we have needed the bank to sign as well?
Thanks,
Monica
Hi Jonas,
I purchased a condo in June of 2008 and received the $7000 tax credit that has to be paid back. After that tax credit then there is the $8000, and now the $10000 that do not have to be paid back. My question is do they have any plans to cancel the payback for the $7000. It just doesn’t seem fair to all of us who have to re-pay.
Thank You’
Dona
Dona,
Great question, I haven’t heard of any cancelling of the repayment. I’ve just known it as whatever you qualified for you received and there’s no retro activity on the more favorable credit. I will keep my eyes and ears out there and post any breakthroughs.
Jonas
I have a question. I am a first time buyer on a condo and meet all the escrow dates to qualify for both the federal and state credits. My father (who owns his own home) is on the loan as a co-buyer because I couldn’t qualify on my own. I am the only person who will be living in it and paying the mortgage. Does this exempt me from receiving the federal and state tax credits?Also my loan person asked me if we could put the loan through as a second home for my father with me still on as a co-buyer (to speed the loan through as we only have a 2 week escrow, crazy I know). Does this effect my ability to claim the tax credits? Thanks!!
Hello Jonas – I closed escrow on 5/12/2010 but have not yet filed for the $10,000 CA Tax credit. I just learned from my friend who is a real estate agent that there is a 14 day deadline post close of escrow that the application for the tax credit will need to be submitted by. It looks like my window of opportunity may have passed there. I’m very concerned and confused why this information was not brought to my attention earlier. Can you let me know if this is true and if so, is there a way around this or has my chances expired?
Thank you,
Tiffany
I would also like to know about not filing for the tax credit in the 14 days since close of escrow. It seems ridiculous for a first come first serve program to have an application period in which to apply. As with Tiffany I am also upset that my real estate agent or escrow company did not bring this important detail to light when they knew I was planning on getting the credit. I too hope there is some way around this filing period rule non-sense.
-Matt
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