If you are first time home buyer considering moving to Marin County, now may be a great time to look at a home purchase. For a small window, home buyers may be able to qualify for both the Federal tax credit and the California tax credit, which could equal $18,000 for some home buyers.
The California Tax Credit
Governor Schwarzenegger extended the tax credit (AB 183) for home buyers in the state of California, providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers and $100 million for home buyers purchasing new construction.
Key Provisions of the California tax credit:
- tax credit is equal to the lesser of 5 percent of the purchase price or $10,000
- taken in equal installments over three consecutive years
- purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).
- Must close escrow between May 1, 2010 and December 31,2010 OR be in contract by December 31,2010 and close before August 1, 2011
The Federal Tax Credit
The federal tax credit is available to both first time homebuyers and “step-up” buyers who have owned their current homes for 5 of the last 8 years.
Key Provisions of the Federal tax credit:
- tax credit is equal tof 10% of purchase price ($80,000 purchase = $8,000) to a MAXIMUM of $8,000
- if buyer has income taxes less than $8,000, the Federal govenment will ‘refund’ the difference to the buyer/taxpayer
(if the taxpayer owes $2,000 in taxes at year end; tax credit = $8,000; taxpayer/buyer will receive $6,000 refund) - must be in contract by April 30, 2010 and must close by June 30, 2010
A first time home buyer who gets into contract before April 30, 2010 and closes escrow between May 1, 2010 and June 30, 2010 may be eligible for both credits. With a significant inventory of homes available for sale in Marin, home buyers who move quickly may benefit.