California’s New Home Buyer Tax Credit

Recently, California introduced their own tax credit for home buyers purchasing a home in California between March 1, 2009 and February 28, 2010. While the federal income tax credit is 10% of the purchase price not to exceed $8,000, California’s tax credit is 5% of the purchase price not to exceed $10,000. The California tax credit is distributed on a first come first-served basis until the $100 million maximum allocated funds is used. There is no maximum with the Federal income tax plan.

What Properties are Eligible?

Just like the Federal plan, single family residences, whether they are detached or attached, condominium, cooperative project unit, house boat , manufactured home or mobile homes are eligible for the credit. However, the home needs to be new construction (you are the first occupant of the home) if you use the California plan.

Do I Have to Be a First Time Home Buyer?

Unlike the federal income tax credit plan, those wishing to take advantage of the California income tax credit need not be a first time home buyer.

Does the Credit Need to Be Repaid?

As long as the buyer resides in the home for 2 years after purchase, they will not have to repay the California tax credit. Under the federal income tax credit, buyers must stay in their homes for at least 36 months.

Are There Income Restrictions?

Not with the California income tax credit plan. The Federal tax credit plan phases out the credit if gross income is over $75,000 ($150,000 for joint filers) and is not available to those who make more than $95,000 ($170,000 for joint filers).

When Can I Claim the CA Tax Credit?

You can claim 1/3 (or up to $3,333) each year for 3 successive years. If you decide to go with the California plan, make sure you have your escrow company fax FTB Form 3528-A within one week of closing. Then, you must file it with your tax returns.

Can I Use Both the Federal and California Tax Credit Plan?

Yes! As long as both purchases qualify, you can use both tax credits for a total of $18,000 in tax credits.

How Can I Get More Information Comparing the Two Plans?

Please fill out the form below to get our spreadsheet comparing the Federal Income tax credit plan to the California income tax credit plan. The spreadsheet will be sent to you instantly via email.

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Have Questions?

Please call us at (650) 520-0915 or email us to discuss how you can utilize either income tax credits when you purchase a home in 2009.

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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