California gets into the First Time Buyer Tax Credit Act

The State of California tax credit will go in to effect May 1 and last through January 1, 2011 with new construction eligible for contracts written by Dec. 31, 2010 - OR - until the funds are exhausted.

The rules differ from the Federal Tax Credit in that the buyer must be a first time buyer (can not have owned a primary residence in the past 3 years) and the $10,000 will be credited toward State tax liability over a 3 year period - up to $3,333 each year for the next three years. If the buyers State Tax Liability is not $10,000 they will not receive the full credit.

The buyer must submit a request to reserve or claim funds within 14 days of closing. The program has a new home and existing home budget - once the funds are used, the program ends, even though the program dates are in effect on paper until January 1, 2011.

A home buyer can not claim the credit if:
The taxpayer or the taxpayer’s spouse is related to the seller
The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

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