Tax Credits and Buyer Incentives
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California's $10,000 Tax Credit Governor Arnold Schwarzenegger recently signed legislation offering up to a $10,000 tax credit for purchase of a home. This comes on top of a soon-to-expire federal tax credit of $8,000 for first-time buyers and $6,500 for repeat buyers under a plan approved by the Obama Administration, which also was designed to bolster the economic recovery by fueling home sales, typically one of the most important sectors of the economy in any recovery. California’s previous home buyer tax credit program was so successful that it ran out of tax credits by the end of June 2009, eight months before it was set to expire and just as the housing market appeared to be turning the corner. Unlike last year’s legislation, this year’s Homebuyer Tax Credit recently adds a tax credit for the purchase of an existing home by a first-time home buyer. Some of the most important details of this once-in-a-lifetime opportunity for prospective home buyers include: - The 2010 New Home Credit and First-Time Buyer Credit begins May 1, 2010.
- The New Home/First-Time Buyer Credits are available only for purchases that close escrow on or after May 1.
- The home must be the buyer’s principal residence for at least two years after the date of purchase.
- Applications must be submitted after escrow closes. The new application will be available by May 1. (The FTB will deny the application if the 2009 form is used or if the 2010 application is received by the FTB before May 1, 2010.)
General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1 and before January 1, 2011. Additionally, the New Home Credit is available for taxpayers who purchase a qualified principal residence on or after Dec. 31, 2010, and before Aug. 1, 2011, so long as an enforceable contract is executed on or before Dec. 31, 2010. The purchase date is defined as the date escrow closes. - The tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence.
- Taxpayers must apply the total tax credit in equal amounts over three successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits are nonrefundable and unused credits cannot be carried over.
- The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit.
- The FTB will allocate the tax credits on a first-come, first-served basis. Only one tax credit is allowed per taxpayer.
- 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 of the taxpayer is 18 or older on the date of purchase.)
- The taxpayer or the taxpayer’s spouse or registered domestic partner is related to the seller.
- The taxpayer qualifies as a dependent of any other tax-payer for the tax year of the purchase.
For all full details and the most recent updates, be sure to visit the Franchise Tax Board’s website at www.ftb.ca.gov. |
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Department of Housing and Urban Development/HUD
HUD Homes - HUD Homes are real estate-owned (REO) properties throughout the nation that are acquired by HUD when a borrower defaults on an FHA loan. Because FHA loans are federally insured, HUD pays the lender what is owed, takes ownership of the home, and moves to sell the property at market value. HUD Homes are sold “as is,” with no repairs done to the property or structure. Adjustments in the selling price are made when the home is in need of rehabilitation, and buyers can often request a) an upgrade of the property,
b) HUD pay all or a portion of closing costs, or
c) HUD provide a moving expense allowance. HUD Homes are sold 'AS IS'. Buyer to verify ALL information, including property statistics, condition, reports, forms, disclosures & availability To purchase a HUD Home, buyers must go through a real estate broker certified by HUD to sell these properties. The broker places a bid on the property, and if the bid is accepted, the buyer has 30 to 60 days to finalize the purchase. HUD Homes can be purchased using most conventional methods, as well as FHA or other government financing programs. A benefit to buying a HUD Home is the real estate broker’s commission is paid by HUD, saving money for the buyer. The availability of HUD Homes changes weekly, and is contingent upon the volume of FHA-defaulted properties in that area; visit the Web site and click on “HUD Homes” to view the current listing. |
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