| The government is doing anything it can to get the real | | | | refundable tax credit. You can apply $3,333 to your |
| estate market moving again. The federal government | | | | state taxes for three years, beginning the year you |
| is offering a tax credit for home buyers. The state of | | | | purchase the home. If you dont pay $3,333 in state |
| California just did the same. For a very short window, | | | | taxes each year, you wont be able to take full |
| the two overlap. If you time if right, you could get the | | | | advantage of this credit. This doesnt necessarily mean |
| federal tax credit and the California state tax credit for | | | | that you owe the state $3,333 on April 15th. Your |
| buying a home. | | | | annual tax bill includes funds withheld from your |
| First, you would have to sign a contract to buy a home | | | | paycheck. Look at tax owed on your state tax return. |
| by April 30th, 2010 and close by June 30th. Make sure | | | | This credit is available on homes closed after May 1, |
| you qualify under both programs. Here are the details. | | | | 2010 until funds run out. |
| Federal Home Buyer Tax Credit | | | | Other things to remember |
| First time home buyers are eligible for an $8,000 tax | | | | These amounts are maximums. The federal tax credit |
| credit. If you have not owned any real estate in the | | | | is actually 10% of the homes value, up to $8,000 or |
| last three years, you qualify as a first time buyer. | | | | $6,500. If you buy a home for less than $80,000 |
| Repeat buyers can get a $6,500 tax credit. This is a | | | | (unlikely in many parts of California!), then your credit is |
| tax credit, not a deduction. Whatever your final IRS bill | | | | capped at less than $8,000. Also, the maximum value |
| is, subtract $8,000 or $6,500. If you dont pay that | | | | is $800,000. |
| much, youll get the credit anyway in the form of a | | | | The California tax credit is 5% of the purchase price, |
| refund. You get it all the first year, so if you buy a | | | | up to $10,000. If you buy a home priced under |
| home before the deadline, the credit will apply to your | | | | $200,000, your credit will be capped at 5% of the |
| 2010 federal income tax. | | | | value. |
| This credit applies when you buy a primary residence, | | | | There are some other criteria, such as caps on |
| whether its a resale or new construction. Its expiring | | | | income. If things look good so far, read the specifics of |
| soon, though. You must sign a contract by April 30th | | | | each tax credit. Better yet, contact a tax professional |
| and close escrow by June 30th. | | | | and make sure youll qualify before you rely on the |
| California Home Buyer Tax Credit | | | | money. |
| The new 2010 California home buyer tax credit also | | | | The window to take advantage of both credits is very |
| applies to the purchase of a primary residence. First | | | | limited, and lenders are very busy. Find a lender and |
| time home buyers can get the credit whether they buy | | | | start the loan application process as soon as possible. |
| an existing home or new construction. Repeat buyers | | | | Collecting bank statements, tax returns and other |
| are eligible for the same $10,000 credit, but only if they | | | | documentation can be time consuming. |
| buy a brand new home. | | | | This combination of tax credits and low interest rates |
| This is also a credit, not just a deduction, which means | | | | will probably never happen again. If you are in a |
| you get a dollar for dollar reduction of your state | | | | position to buy a home, this is your golden opportunity. |
| income tax liability. Unfortunately, this is not a | | | | |