new homes first-time buyers

Mortgage Update: A Gift from the Governor

March 29th, 2010

The state of California has re-established and expanded the $10,000 homebuyer tax credit. This program was so successful in 2009 that it ran out of funds after just four months, with 10,659 home buyers claiming the credit.

The new law, AB183, just signed by Gov. Schwarzenegger, doubles the allocation to $200 million in tax credits for homes purchased between May 1, 2010 and Dec 31, 2010. The state also extended the new credit to first-time homebuyers of existing homes, as well as buyers of newly constructed homes. The funds will be split evenly between the two groups and will be available on a first-come, first-served basis.

As before, the tax credit is equal to the lesser of 5% of the purchase price or $10,000 and will be applied in equal amounts over a period of three taxable years. The buyers will have to occupy the home as their primary residence for at least two years.

Buyers have no income limits or purchase price limits. The only requirements are that the buyer must not be a dependant and must not purchase a home belonging to a relative. Remember – the program ends when funding allocations have been met.

Many thanks to Brownie Stanisch, of Prospect Mortgage, for this information.