Only the Federal Tax Credit Expired on April 30th.
A whole bunch of noise was made in the nationwide news about home buyers rushing to get into contract by last Friday, April 30 in order to still qualify for the federal home buyer’s tax credit. But as I noted previously on this site, that particular tax credit was a bit of a snoozer for many buyers on the Peninsula, and particularly in San Carlos. Why? Because the federal program only applied to home purchases less than $800,000. And if you’ve been shopping for a home in San Carlos, you know that not many homes meet that criteria — in fact, only 17% of the homes for sale right now in San Carlos would qualify at their current list price.
California’s Credit is More “Buyer Friendly”.
The new California home buyer’s tax credit, which just kicked in on May 1st, is different from the federal plan in a number of key areas. It’s important to review the plan in detail via the links at the bottom of this post, but here are some of the key differences:
|Amount||5% of Purchase price, up to $10,000||10%, up to $8,000|
|Max Purchase Price||N/A||$800,000|
|Eligibility||1.) First Time Home Buyer, or
2.) A “Never Occupied” Home.
|1.) First Time Home Buyer, or
2.) Long-Term Resident.
|Purchase Date||May 1, 2010 – July 31, 2011
Enforceable contract must be executed by 12/31/10
|June 30, 2010
Contract must be executed by April 30, 2010
You can see why this plan should be of greater interest to buyers in this area, since the tax credit is greater, there’s no cap on the purchase price, and no limits on the buyer’s income.
Limited Funds Available.
The State of California has allocated $100M for tax credits for each category of eligibility — First-Time Home Buyers, and Never Occupied Property — and the funds are available on a first-come, first-served basis. The expectation is that the First-Time Buyer’s pool of funds will be exhausted more quickly than the pool for new construction. But regardless of which credit you qualify for, it’s important to reserve your credit as soon as you are eligible.
Be sure to seek the advice of a qualified tax professional if you’re interested in applying for these credits. After all, our government has a unique way of taking a simple concept and making it insanely complicated. And tax professionals are the only ones who have the secret decoder ring. But here are a few links to help you better understand the program:
California Association of Realtors: First Time Home Buyer’s Tax Credit Chart
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