$10 K New-Home Tax credit from State of California

The new state budget contains a $10,000 tax credit for buyers of new homes in California. Here are some highlights:

· Applies to new, never-occupied houses and condos bought between March 1, 2009, and March 1, 2010.

· It is for 5 percent of purchase price or $10,000, whichever is lower.

· It is for both first-time buyers and move-up buyers.

· Limit is one. This is not for investors.

· Buyer must live in the home for two years to receive the credit.

· Buyers will get $3,333 off their taxes starting in the year of purchase, and $3,333 in each of two years afterward.

· There are no income limitations for the buyer.

· The tax credit does not have to be repaid (unless buyer sells or rents out home before two years).

· There is a $100 million limit statewide on this tax credit. First come, first served.

· If you are a first-time buyer, this $10,000 state credit can be combined with new $8,000 federal tax credit for first-time homebuyers.

· Some details are still murky. It is not clear if the March 1 start date applies to date of contract or close of escrow. If you are in the middle of a deal, check with builder's sales agent.

Source: State Senate, California Building Industry Association

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