Congress Renewed It--------! 

Get Your First Time Home Buyer or
Existing Homeowner Tax Credit

More good Orange County Real Estate news for you and the housing market recovery.

Following the U.S. Senate’s earlier favorable vote, the U.S. House of Representatives on November 4^th, voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500.  

To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years.  

The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers.  We expect that number to increase dramatically in the months ahead with this new legislation in place.  

This is terrific news and should cause first time home buyers to immediately start searching again for San Clemente real estate and South Orange County real estate properties. 

California First Time Home Buyers; Suspension of $10,000 Tax Credit

$10,000 Tax Credit for “NEW” Home Buyers in California - Suspended

Source: New Home Section Blog.

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FTB Says it is No Longer Accepting Applications:

As of July 3, 2009, we are no longer accepting new home credit applications. As shown in the numbers below, we have received over $100 million in new home credit applications and more than 12,000 applications. Read all about it here.

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This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

The California First Time Home Buyer $10,000 Credit is available on a first-come first-served basis and was supposed to last through March 2010. Almost any newly built home qualifies, as long as it's an owner-occupied, principal residence on which property tax is paid. It could be a single-family home, a condo, a coop, a manufactured home or mobile home -- even a houseboat. Only owner-built housing does not qualify. There is no cap on the home price or buyer's income.

The California First Time Home Buyer Credit reduces taxes dollar-for-dollar up to $3,333 a year for three years, or 5% of the purchase price of a home, whatever is less. Unlike the federal first-time home buyers tax credit, which is $8,000 or 10% of the home price, whichever is less, the California credit is not refundable. That means the credit will only wipe out taxes up to the full amount paid or owed but no more.

For example, if the first time California home buyer's tax bill came to $2,000 for the year, a buyer claiming the full $3,333 would owe nothing but couldn't claim the extra $1,333 back from the state.

First-time, new-home buyers in California can claim both the federal credit and the state if they qualify. That could reduce taxes by $11,333 for the first year of ownership.

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Source:  Money Magazine

The $10,000 tax credit is for home buyers that purchase a new home between March 1, 2009 and March 1, 2010. The bill set aside $100 million for the tax credit, so after 10,000 new homes are purchased, the credit is gone. Last month, an estimated 29,458 new and resale houses were sold statewide; if you want the incentive, you probably won’t want to wait until next March. Below are details about the tax credit.

1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.

2. The tax credit is for new homes only. The construction of a new home generates more tax revenues than the $10,000 tax credit will cost, so the credit is limited to the purchase of new homes. You will not qualify for the state tax credit if you buy an existing home.

3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.

Examples: (price of home x .05)

• If you purchase a new home that costs $150,000, your tax credit will be $7,500.
• If you purchase a new home that costs $200,000, your tax credit will be $10,000.
• If you purchase a new home that costs $450,000, your tax credit will be $10,000.

4. Home buyers will receive the tax credit, in equal amounts, over 3-years.

Examples: (Tax Credit / 3)

• If your tax credit is $7,500, you will receive a tax credit of $2,500 each year for three years.
• If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.

5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.

6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.

7. The tax credit only applies if the purchased home is your primary residence.

8. There is no down payment requirement to receive the $10,000 tax credit.

9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a  first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.

10. The tax credit is limited to the first 10,000 new home purchases