The State of California Franchise Tax Board has announced the process for applying for the 2010 First-Time Buyer Tax Credit which is worth up to $10,000 for qualified first-time homebuyers.
First-time buyers wishing to claim the credit must very carefully follow the rules to claim this credit or risk being denied this tax credit. It is quite likely that an applicant will NOT be granted the credit if they don't follow the rules exactly as the FTB expects it will take 3-6 months to notify taxpayers after an application is received.
According to the math of the program, the tax credits will likely only be issued to 12,285 first-time home buyers. To put this in perspective, in March 2010 it is estimated by Dataquick that 37,295 homes (new and resale) were sold throughout the state. With first-time buyer affordability at 64% according to the California Association of REALTORS®, a large percentage of homes are selling to first-time buyers. With a minimum wait time of 3 months before hearing from the FTB, a homeowner will only hear the 'bad news' of a denial after the program is fully subscribed. In fact, the FTB is preparing to share the bad news on their website as early as May 6th as they will start forecasting the number of applications received and forecast when the application cut-off will end.
Please carefully review the rules on the FTB website and follow them completely and accurately. As of this writing, some of the requirements for the credit include the following:
- Escrow must close on or after May 1, 2010
- Only one faxed application should be sent
- Cannot have taken the 2009 Tax Credit
- Must be 18 or older (or younger if married or in a registered domestic partnership)
- No relationship to the seller
- Cannot be a dependent of another person
- Only one complete application per residence is to be submitted
The published process is:
- After close of escrow and no more than 14 days after escrow closes the application should be faxed to the FTB. No other delivery methods are accepted.
- Both buyer and SELLER complete the California Form 3549-A as instructed in the directions
- Do not use the prior year form
- Non-qualified buyers should NOT be included on the form
- Fax the FINAL HUD-1 and Form 3549-A to the FTB at 916.855.5577
- Retain a copy of the FAX CONFIRMATION for your records and as proof of delivery
The Franchise Tax Board recommends that the escrow officer is the person to fax the documents to the FTB. Buyers need to fully understand that this is not the responsibility of an escrow officer and the buyer is the one ultimately responsible for the filing of the forms with the FTB.