A new state tax credit goes into effect on May 1, 2010 for first-time home buyers and buyers of new, never-occupied homes. The state has allocated a total of $200,000,000 to be split evenly between both groups.
The tax credit applies to escrows that close on or after May 1, 2010. and before January 1, 2011. Additionally, if escrow is entered prior to December 31, 2010, you have until August 1, 2011 to close escrow.
These tax credits are limited to the lesser of 5% of the purchase price or $10,000. The tax credit must be applied over three years in amounts beginning in the year the home was purchased.
The tax credit is not refundable, meaning if your total tax is less than $10,000, you will not be getting a check for the difference.
In any event, please do not construe this as legal or financial advice. Please contact your lawyer or financial advisor if you intend to use the credit.
For full information, go to: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
P.S. If you open escrow before April 30th, you can take advantage of the state and the federal tax credits.
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