There’s a lot of confusion and misconception out there as to what this law is and how to receive this credit. Below we have clarified the definition of California's First Time Home buyer Tax Credit along with an explanation of how to apply. For more information or to see if you qualify please contact us at yourtrustedlender@gmail.com .

California Home buyer Tax Credit Definition:
The law defines a "first-time home buyer" as a buyer who has not owned a principal residence three years before the purchase date of the new property. If the buyer(s) are married, the law looks at both the husband and wife and if either has owned a home within the previous three years both are disqualified. Ownership of vacation homes or rentals do not count. The home must be used as a primary residence which includes attached (condominiums) and detached homes, manufactured homes (mobile homes) and houseboats. The 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.

How Much is the Tax Credit:
California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased. The State of California allocated $100,000,000 for this tax credit therefore buyers must apply for the credit allocation from the State (see your tax advisor for proper application forms and procedures). All applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available.

How To Apply:
It is imperative that within one week/seven calendar days after the close of escrow that you follow the specific instructions per the Franchise Tax Board or your personal tax advisor. A brief explanation of the process is as follows;

  • The seller must complete Part I of Form 3528-A (Application for New Home Credit) which will certify that the home has never been occupied, and provide a copy to the buyer or escrow person.
  • The buyer will complete Parts II & III of Form 3528-A.
  • The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to the Franchise Tax Board or your personal tax advisor, and provide a copy to the buyer.
(Source www.ftb.ca.gov)

To get pre-qualified and see if you are able to take advantage of California's Home buying Tax Credit contact us at yourtrustedlender@gmail.com