Monday, April 12, 2010

Californians Get $10,000 Homebuyer Tax Credit

California Senate passed a new state $10,000 Homebuyer credit to pickup where the federal tax credit left off. Bill AB 183 passed on March 22, 2010.
The bill authorizes a credit against those taxes in an amount equal to the lesser of 5% of the purchase price of a qualified principal residence, as defined, or $10,000, for 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, subject to specified restrictions, including the submission of a certification to the Franchise Tax Board by either the taxpayer or seller, made under the penalty of perjury, that the residence has either never been occupied or that the taxpayer is a first-time home buyer. To qualify, the buyer must not be a dependent and must purchase a home that does not belong to a relative.
Last year's credit was also worth up to $10,000 spread over three years but applied only to new homes, not existing ones. The new credit is available to anyone who buys a newly built home or to first-time home buyers who buy a newly built or existing home.
To save $10,000, a homeowner must owe at least $3,333 in state income tax in each of the three years. A homeowner who owed only $2,000 in one year would lose $1,333 in tax savings that year. The unused credit cannot be used to reduce taxes owed in past or future years.

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