In late March Governor Schwarzenegger signed a bill that will award an estimated $200 million in state income tax credits to first time home-buyers who buy a newly built or existing home, which is good news for prospective home buyers in San Diego. The California tax credit began on May 1, 2010 and will continue until December 31, 2010, or until the funding has been exhausted. The bill, AB 183, provides the funding be split evenly between the purchase of existing homes and newly built homes, allocating $100 million to each group. The credit is worth up to $10,000 over the next 3 years, but the homeowner must owe at least $3,333 in state income tax in each of the 3 years.
The Franchise Tax Board estimates the actual cost for the state will be about $200 million, but there is a possibility that it could amount to more or less. The bill allows for the tax board to award at least 17,544 buyers of existing homes and 14,286 or newly built homes. If every new home buyer received the full tax credit of $10,000 to total cost for the state would be $300 million, but is not likely.
Analysts agree the federal tax credit for first time home buyers helped sales increase by 27% in March, compared to a record low in February. So far about 1.8 million home buyers had used the federal tax credit with a cost of $12.6 billion according to the Internal Revenue Service. The hope for the new state tax credit is that Californians will take advantage of this opportunity, and keep the real estate market in this upward trend. The federal tax credit that ended on April 30, 2010 and gives until June 30th to close, slightly overlaps with the new state tax credit. This overlap poses a potential to take advantage of both credits totaling $18,000 available to homebuyers.
To qualify for the new state tax credit the home must be a single family residence, either detached or attached. The taxpayer must occupy the residence for a minimum of two years following the purchase. A first time buyer is eligible to purchase either an existing or newly built home, where as a non-first time buyer is only eligible for a new home that has never be occupied. A first time buyer is defined as an individual who has had no ownership interest in a principle residence for three years before the date of purchase. You must also be eligible for the California property tax homeowner exemption. For more detailed information please visit the California Franchise Tax Board website.
Since there are limitations, restrictions, and other deadlines, not everyone can qualify for the tax credit. If you recently bought real estate in the San Diego area, or are considering this opportunity for the new state tax credit, it is a good idea to contact your attorney or tax professional to make sure you qualify.
Nick Alameddin
Broker
C 760.802.4166
F 858.455.0100
http://www.PremiereSD.com
DRE License #01426515
If you know anyone looking to sell or buy a home, please e-mail me their name & phone number. I will gladly get them a great deal and provide them bar none service.
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