South Orange County Real Estate

by Nick Bublik & Irina Bond

Updated Homebuyer Tax Credit Chart 2010

Federal law offers up to $8,000 for first-time homebuyers and $6,500 for long-time residents. California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never been occupied. Here’s a handy summary of the two tax credit laws:

HOMEBUYER TAX CREDIT FEDERAL CALIFORNIA
Amount of Tax Credit 10% of purchase price not to exceed $8,000 for First-Time Homebuyers or $6,500 for Long-Term Residents. 5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.)
Date of Purchase By June 30, 2010, but taxpayer must enter into a written binding contract by April 30, 2010. From May 1, 2010 to July 31, 2011, but an enforceable contract must be executed by December 31, 2010.
Principal Residence Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121). Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).
Type of Property House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S. Single-family residence, whether detached or attached.
Eligibility 1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR

2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years.

1. First-Time Homebuyer: Up to $10,000 if the buyer (and buyer’s spouse if any, according to FTB) has not owned a principal residence during the three-year period before date of purchase; OR

2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller.

Income Restriction Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers). No
Maximum Purchase Price $800,000. N/A
Refundable Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check. No
Repayment No repayment required if the buyer owns and occupies the property for at least 36 months after purchase. No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase.
Multiple Buyers
(not married to each other)
Tax credit may be allocated between eligible taxpayers in any reasonable manner. Tax credit must be allocated between eligible taxpayers based on their percentage of ownership.
Maximum Credit for All Taxpayers N/A $100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis.
Reservations of Credit N/A Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive.
When to Claim Full tax credit may be claimed on 2009 or 2010 tax returns. 1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).
Tax Agency Internal Revenue Service (IRS). Franchise Tax Board (FTB).
How to File First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law.
Other Restrictions Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien. Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2.
Legal Authority 26 U.S.C. section 36. Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183).
Date of Enactment November 6, 2009 (as revised). March 25, 2010.
More Information IRS Web site at http://www.irs.gov/newsroom/article/0,,id=
204671,00.html
.
FTB Web site at http://www.ftb.ca.gov/
individuals/ New_Home_Credit.shtml
.

Readers who require specific advice should consult an attorney.

Copyright© 2010, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Filed under: Tax Credits,

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About Us

As a Russian-speaking South Orange County team and residents of 20 years, Nick Bublik, REALTOR®, & his assistant, Irina Bond, are qualified and committed to guiding their clients through the real estate buying and selling processes with utmost loyalty and a wide range of experience.

Committed to providing exceptional service in each of their endeavors, Nick & Irina are passionate about helping each client reach their real estate goals. Through organization, dedication and perseverance, they deliver on their promises and facilitate results, no matter how complex the circumstances.

Together, Nick & Irina promise real estate transactions that exceed expectations.

Nick Bublik, REALTOR®
(949) 233-9304
Irina Bublik, Assistant
(949) 939-7831