The California State Legislature passed a new budget yesterday that included a tax credit of up to $10,000 for the purchase of a newly constructed home. Unfortunately, this tax credit is not available for the purchase of an existing previously owned home. The following are the features of the new tax credit, but additional details must still be worked out:
1) The credit is equal to 5% of the homes purchase price, up to a maximum of $10,000
2) The credit is available from March 1, 2009 to March 1, 2010. The maximum budgeted for this credit is $100 million. It is not clear if the effective date is when the contract is signed or when escrow closes
3) It appears that the tax credit will be spread over 3 years. Details of this have not been released
4) The new home buyer must live in the fome for at least 2 years. There is no repayment requirement unless the owner sells or ents the home within 2 years of purchase.
5) There are no income limitations for qualifying for the tax credit
6) There is no "first time buyer" restrictions.
7) The home must be a newly constructed home and never previously occupied.
8) If the home is purchased by more than one buyer, the credit may be allocated among them proportionately as to their ownership interest.
NOTE: The information contained above is for educational purposes only and is not intended for any particular person or circumstance. A competent tax professional should always be consulted before utilizing any of the information contained above. For more information about Income Tax Issues affecting real estate, visit my website at http://www.maureenmegowan.com
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