Allocations for the California First Time Home Buyer State Tax Credit are only estimates, based on small samples. The numbers are overstated as there will be duplicate, revised, and invalid applications included as the Franchise Tax Board have not verified any of the applications.

Applications for First-Time Buyer Credit received as of 06/08/10

Applications and Allocations

These estimates are only provided to give a general idea of the number of applications received and the amount requested for the First-Time Buyer Credit. They are showing 57% of the estimated requested credit since the $100 million cap will only be reduced by 57% of the credit allocated to the buyer. The amounts do not reflect actual amounts which will be allocated. These estimates will be updated each Thursday until they are sure that they have received more than enough applications to allocate the full $100 million. Once they determine that they have received sufficient applications to allocate the full $100 million, they will stop accepting applications for the First-Time Buyer Credit.

Estimates for the New Home Credit will be provided once their computer system is completed.

Guys and Gals, at the current rate of 325 applications per day and at roughly $5500 per credit allocated, the $100 million First Time Buyer Credit will last for approximately 8 weeks, 5 of which have passed, leaving 3 weeks to go.

Tune in every Thursday or so for updated numbers on the First Time Buyer credit.

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Related Articles:

Reserve Your Tax Credit on a New Home in California

The Beginning of the California State Tax Credit

Early Guidelines for 2010 State Tax Credit

Reserving your tax credit on a new home in California has some specific criteria that you must follow in order to be eligible.

The FTB or Franchise Tax Board, will accept reservation requests for the New Home Credit by fax only beginning May 1, 2010.

Reservation Requests

If a buyer wishes to request a reservation, before the close of escrow:

1. The seller must complete Parts I, II, & III of Form 3549-RR, Reservation Request for New Home Credit.
2. The buyer completes Parts IV & V.
3. Fax the completed Form 3549-RR and the required pages of the purchase agreement to FTB at 916.855.5577. If escrow has opened, it is best for the escrow person, on behalf of the buyer and seller, to fax the completed Form 3549-RR and the required pages of the purchase agreement to FTB and provide a copy to the buyer. If escrow has not opened, the buyer may fax it to FTB. (The buyer retains ultimate responsibility to ensure the completed reservation request and the required pages of the purchase agreement are submitted timely to the FTB.)
4. Do not fax the entire purchase agreement. Only fax the pages which show:
   1. Property address
   2. Buyer’s name
   3. Seller’s name
   4. Purchase price
   5. Deposit amount
   6. Buyer’s signature
   7. Seller’s signature

• Fax is the only delivery method as the date and time stamp on the fax will determine the order in which credits are reserved.
• Fax only one completed reservation request per residence with all qualified buyers listed.
• Do not fax the reservation request if the contract was entered into before May 1, 2010.
• Do not fax the reservation request to FTB after escrow closes or with the application (Form 3549-A).
• The buyer keeps a copy of the completed Form 3549-RR for their records.
• Use the online fillable Form 3549-RR. Simply fill in all required information, print the form, and sign.

To see the proper guidelines for the tax credit to make sure you are eligible to even make a request please read this article on the California Guidelines for Tax Credit.

Also, visit the FAQ – California Tax Credit often to see all the scenarios and comments posted by real people like you and me.

As of May 1, 2010 the California New Home and First Time Home Buyer Credit began.  The First Time Home Buyer credit will go at a seriously brisk pace, so you better get your forms in on time as escrow closes.  For New Home buyers, it will be a bit slower, but you can also reserve your request for credit.

Everyone has been anticipating the credit, now it comes down to following guidelines, filling in the paperwork correctly, having the appropriate items and then faxing to the correct number where your paperwork will receive a time and date stamp for first come first serve.  You will then wait 3-6 months for your official answer from the Franchise Tax Board.

The FTB said  “we must build a new computer system before we begin verifying the applications and reservation requests.”

Okay, after that shocking revelation, let’s get down to business.  Here’s how to apply for your tax credit:

Apply

Within two weeks (14 calendar days) after the close of escrow:

1. 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.
2. The buyer will complete Parts I, V & VI of Form 3549-A.
3. Fax the completed Form 3549-A and the final settlement statement (generally the buyer’s HUD-1 statement) to FTB at 916.855.5577.

• Fax is the only delivery method as the date and time stamp on the fax will determine the order in which credits are allocated.
• Fax only one completed application per residence with all qualified buyers listed.
• Do not fax the application to FTB before escrow closes.
• The buyer keeps a copy of the completed Form 3549-A for their records.
• Use the online fillable Form 3549-A. Simply fill in all required information, print the form, and sign.

FAQ on California Tax Credit – read all the questions and comments for the past month as we’ve built up to this moment

Related Articles:

Guidelines for California Tax Credit

The California Franchise Tax Board released the guidelines for the 2010 tax credit that everyone is raving about.

This is an update to last week’s post on the California tax credit extension. I will concentrate on answering several questions that have been raised and provide a few popular scenarios that many can relate to.

Now remember, in March 2009, the initial $100 million tax credit for new homes only was launched. By July 3, 2009 the state had roughly 12000 applications, of which about 10,700 were allocated their credit. The new tax credit for 2010 launching on May 1, 2010 for $200 million will be split evenly; $100 million for new home sales and $100 million for first time home buyers. Should a first time home buyer want to buy a new home, their credit will fall under the new home allocation. At the current pace of resales in California, the first time home buyer allocation could be exhausted within 1 maybe 2 months, whereas the new home credit should last equal to that of 2009, about 4 months. Better have your ducks in a row on this one, right?

FAQ for California Tax Credit

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New Home Tax Credit Highlights

• $100 million allocation for brand new home purchases
• Any taxpayer can apply
• Move up buyers, first time home buyers eligible
• Detached or Attached single family residence; does not include rentals, 2nd homes or vacation homes
• Ability to reserve tax credit for home not yet completed
• Must be primary residence for at least 2 years or tax will need to be refunded
• Homes must close escrow after May 1st, 2010 but before December 31, 2010
• If credit lasts this long – you may obtain a contract by December 31, 2010 and close by August 1, 2011
• Seller must submit Certification of home never been occupied

First Time Home Buyer Credit Highlights

• $100 million allocation for existing homes; if FTHB buys a new home the credit is taken from the new home allocation
• Standard sales, short sales, foreclosures are eligible
• Escrow close date is considered purchase date – those that enter a purchase contract prior to April 30th, 2010 and close after May 1st, 2010 could be eligible for both the Federal refundable credit and the state credit
• “First Time Home Buyer” = never purchased or no ownership in a principal residence during the preceding 3 year period ending on the date of purchase of the new principal residence
• Must be primary residence for at least 2 years or tax will need to be refunded
• Certification from taxpayer that they are a first time home buyer

Scenario #1

My wife and I are in the process of purchasing a new home jointly with my parents (50, 50). The new home is about $450,000 and the closing date of this new home will be in September 2010. There will be 4 persons on the title: me, my wife and both of my parents. However, only my wife, my kid and I will be living in the new home as our primary residence.

With my parents who are not going to live in the new home, on the title, will this affect my being qualified for the full amount of $10,000 California 2010 new home tax credit?

$450,000 purchase price
4 people on title, parents will not live in home
Husband/wife will occupy as primary residence = Qualified for credit

$450,000 x 50% ownership = $225,000 qualified purchase price
$225,000 x 5% credit = $11,250, however $10k is the max

50% Ownership x $10,000 credit = $5000 credit amount

You and your wife would be eligible for a $1666.66/year credit for 3 years as long as you stay in the home as your primary for the first 2 years.

Scenario #2

My wife and I plan on purchasing a home between May 1 2010 and Dec 2010; However, she and her sister are co-owners of a rental condo. Do we still qualify for first time homebuyer credit for CA?

As long as the residence that is held by your wife and her sister has not been a principal residence for her in the preceding 3 years up until the date you purchase the new home, she will be okay. So basically that condo has to be a rental or claimed as such on the tax returns.

Scenario #3

I am in the process of closing our escrow on April 19th for an existing home (not new) and I am a first time home buyer. Given that the tax credit is going to be effective from May 1st 2010, does it makes sense to push our closing date to May 1st ?

This is simply to take advantage of both credits, the Federal $8000 tax credit and the state. My suggestion if you choose to extend your escrow would be to speak with your tax professional to make sure you will be receiving a benefit from the tax credit.

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FAQ for California Tax Credit

Apply for a California loan

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Forms for Reference

Assembly Bill 183

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

Cash for Clunkers is gone. Now Congress has another deal for you: Buy a home before May 1, 2010 and collect up to $6,500 from the government if you’re a move up buyer.  If you’re a first-time home buyer, get up to $8,000 as the credit has been officially extended.

As part of the government’s efforts to encourage people to spend money to help revive the economy, the House voted 403-to-12 yesterday to expand a popular tax credit for home buyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Obama, who plans to sign it today.

First-time home buyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring – and to expand it to many people who already own homes.  Too bad they didn’t extend it into the purchase season.  Can’t complain I guess.

First-time home buyers – or people who haven’t owned homes in the previous three years – could get up to $8,000.  Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500.  To qualify, buyers have to be in a purchase agreements by April 30, 2010 and close on or before June 30, 2010.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for single tax filers with annual incomes above $125,000 and for joint filers with incomes above $225,000.

Related Articles

Home Buyer Tax Credit Extended

8000 Tax Credit Guidelines for California First Time Home Buyers

How to Apply for the 8000 Tax Credit

California’s real estate market just received another boost (almost) from last night’s vote in the Senate.  Although it’s not the final vote, it effectively seals the deal on the plan to extend the $8000 first time home buyer credit through April 30th 2010 as well as expanding the credit to move-up-buyers  on a smaller scale ($6500).

Recently, Congress extended the FHA Loan Limits that have been put in place to help more buyers and owners to take advantage of the record low mortgage rates.

First Time Home Buyer Tax Credit extension

+ Move-Up-Buyer expansion

+ FHA Loan Limit extension

+ Record Low Mortgage Rates

= Housing Recovery

Or does it?

The home buyer tax credit is extended to April 30th, 2010 and will end June 30th, 2010.   A home buyer can get into contract by April 30th and then is given 60 days to complete the purchase transaction.  Sounds great, but as many years as I’ve been in the business, April is the beginning of purchase season and things really heat up in June when schools let out for the summer.   I’m sure this is all part of the strategy since we know that from April – September of any given year the majority of home sales occur.  It’s like having Christmas stuff on sale in February – you really have to plan ahead.

The expansion to Move-Up-Buyers allowing $6500 more purchase power is a smart addition.   However, the income cap of $150,000 for single filers and $225,000 for joint will help but not for all Americans.

FHA loan limits have been and always will be an issue for certain parts of California.  Take Riverside County for example.  The loan limit is $500,000 which is much better than $417,000, but what about parts of the desert like Palm Desert or La Quinta where the average 4 bedroom condo is well above $700,000.  When there is a limit to a loan amount, property values can be suppressed.  Sure the resurgence of the Jumbo market is helping here, but not all can afford 25% down.

Don’t get me wrong, I’m ecstatic about the loan limits remaining at their current levels, but I am a Libra, I balance both sides.  While it does help many, it still hurts others whether we like it or not.

Okay, record low mortgage rates.  I won’t go on a tangent here, but if you’re on the fence thinking it will get better – IT WON’T.  Get off the fence, get approved for a loan and act accordingly.  Enough said, right?

Where am I going with all this you ask?

I see additional assistance coming to the first time home buyer.  Heck in 2009 we’ve seen 350,000 additional buyers come to the market and take advantage of the credit whereas without it, most likely these folks would remain renters.  The majority of these buyers were on the mid to low end with the average purchase price well under $250,000. The expansion to the move-up-buyer is a step in the right direction, but we need to pay more attention to this arena.

The $250,000 – $500,000 range is under radar as the ‘next wave‘ of foreclosures could be on the horizon.  Although the $6500 expansion will assist in mopping up some of this inventory, it will not solve the ongoing flood of homes that might be on the court steps in 2010-2011.  Some say “what shadow inventory?”  Only time will tell.

How about extending credit not by a check from the IRS, but from Fannie, Freddie or Ginnie in the form of a loan to homeowners that have had a short sale or foreclosure in the last 24 months?  Currently, FHA requires 3 years from foreclosure and typically 3 from short sale before a borrower is allowed to apply for the next home loan.  It’s longer within Fannie and Freddie’s guidelines.

Several of my clients still have employment, make decent money and can afford a home, just not the one they are in or were in – especially with the time bomb loans they got themselves into.  The hand doesn’t need to reach into a pocket to reward them with a check for $6500, the hand needs to be extended out to them so they can get across the high water they are in.  Just a thought.

What are your thoughts or ideas on the home buyer tax credit, loan limits and the expansion to move-up-buyers?