Going going Gone - $10k CA Tax Credit Used Up (with a caveat)

So for those of you who follow me on twitter you will have seen this last week. For those of you who were trying to get that tax credit under the wire, chances are you were watching it daily - like me. My client who bought at the Arterra got his tax credit request faxed in the day before the Franchise Tax Board reported they had reached their limit of $100 million in credits issued. On Monday the FTB web site issued this new statement:

Tax Credit for New Home Purchase Important update (06/29/09):
As shown in the numbers below, we have reached $100 million in new home credit applications. Because many of these are duplicates, revised, or invalid, we plan to receive 12,000 applications. This will ensure we have more than enough valid applications to allocate the full $100 million.

These additional applications will be subject to the availability of remaining credits. Now that we have received 11,000 applications, we will update this page each business day with the total number of applications received. We will no longer accept applications once we have received 12,000, and the fax service will be disconnected. We will continue to report certificates issued on a weekly basis until the full $100 million has been allocated. We expect to complete processing all certificates inAugust. We will send a notification in response to all applications received, indicating th amount of credit allocated or denied.

***Important update (07/03/09): FTB No Longer Accepting Applications

Tax Credit for New Home Purchase [Franchise Tax Board]
$10,000 Reasons to Buy a New Development this Year [SFHomeBlog]
The Countdown Begins [SFHomeBlog]

The Countdown Begins - 17.5% of CA New Home Tax Credit left...

Basically, if you're not closing escrow in the next two weeks on your never been lived in home - don't plan on getting that $10,000 CA new home tax credit. What's going to be interesting is to see if the sales in new developments, that spiked in May, slow down as the news goes out that the tax credit is gone.

Tax Credit for New Home Purchase [Franchise Tax Board]
CA Tax Credit more than 65% gone in 3 months [SF Home Blog]
$10,000 Reasons to Buy a New Development this Year [SF Home Blog]

$10,000 CA Tax Credit more than 65% gone in 3 months

As of May 20th 2009 the new home California $10,000 tax credit is over 65% gone.  May has seen a huge spike in new home sales and being as the credit cannot be applied for until escrow closes, and is on a first come first serve basis, the window to qualify may be gone as early as mid June.   New numbers are updated every Friday.

Two state lawmakers have applied to extend that credit from $100m, to $300m (the argument being the state takes in more money per new home sale then it loses issuing the credit) but it remains to be seen whether that measure will fly.  

Just purchasing a home that has never been lived in does not automatically qualify you.  You must close escrow and submit your application to the Franchise Tax board via Fax only, within 7 days of close of escrow.  Clear instructions and forms for applying for the credit can be found here

Legislation Introduced to Extend $10k New Home Tax Credit [The Desert Sun]

Tax Credit for New Home Purchase [Franchise Tax Board]
$10,000 Reasons to Buy a New Development this Year [SF Home Blog]

$10,000 CA New Home Tax Credit Update

Here is more detailed information on the California new-home tax credit. The information comes from this CA government webpage:

Tax Credit for New Home Purchase

This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

Read entire Tax Credit article

Tax Credit for New Home Purchase [Franchise Tax Board]
$10,000 New Reasons to Buy a New Development This Year [SFHomeBlog]

$10,000 New Reasons to Buy a New Development This Year

Included in the recently passed California 2009 Budget is a $10,000 tax credit for purchasers of new or previously unoccupied homes. The credit is sound fiscal policy since a new home purchase generates an estimated $8000 more in taxes than the credit costs the state.

Details of the how to get the tax credit are still being ironed out, but at the moment it looks as though the developer will need to issue a certificate to both the Buyer and the Franchise Tax Board (California’s State Income Tax).

To qualify for the credit the home has to be purchased between March 1, 2009 and March 1, 2010.

There is a caveat (isn’t there always) the bill set aside $100 million for these tax credits or the first 10,000 new homes sold, which will be issued on a first come first serve basis. Once that money is gone, so is the credit. No word on how long that credit will last but based on figures from last months new development sales – an estimated 29,458 statewide, the fund could be exhausted as quickly as June of this year.

Details that are known are as follows:

1. The tax credit is for new homes only purchased March 1 2009 – March 1, 2010. You will not qualify for the state tax credit if you buy an existing re-sale home or condo.

2. The tax credit is good for 5% of the home’s price or $10,000, whichever is less. So, if you purchase a home worth $200,000 or more, you qualify for the full, $10,000 tax credit.

3. If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.

4. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.

5. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.

6. The tax credit only applies if the purchased home is your primary residence.

7. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.

8. The tax credit is limited to the first 10,000 new home purchases.

Click here to take a look at the Senate Bill on the home purchase tax credit.

From all accounts the bill was passed in large part due to a Republican State Senator Roy Ashburn and a lot of work from Signature Properties who have more than one new development in California that stand to benefit...