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California Homebuyer Tax Credit - Do You Qualify For The $10000 First Time Homebuyer Program ?

07/14/2010

The California homebuyer tax credit sparked a 14.1% increase in home sales statewide for the month of May, according to the California Association of Realtors' website in regarding the new tax credit. June saw an additional 13.1% increase. Currently, sales are up over 25% from this time last year, and California's Franchise Tax Board reports that they've received applications requesting more than the $100 million in tax credit allocated to the first time homebuyer program. The FTB plans to allow about 3000 more applications in order to account for duplicates and unqualified applicants, and announced Monday that they will update their website every day as that number decreases.

The credit pool is dangerously shallow for first time homebuyers who plan to take advantage of the tax savings, but there is still time. Application rates will likely increase over the next week for both the first time tax credit program as well as the new home tax credit program. The FTB insists that they'll continue to be open about the exact number of credit requests they have received. All data is available on their website.

Despite the impending application cap, the application process itself hasn't changed. Applicants are encouraged to fax their requests to the offices of the Franchise Tax Board, though the FTB cautions that it may take up to an hour to get through due to busy phone lines.

In order to qualify for the California homebuyer tax credit, applicants must meet specific requirements. The requirements for the first time homebuyer program are different than those for the new home program.

According to the FTB, a first time homebuyer is one who has not owned a home, either in full or in part, at any time during the past three years. This includes homes located in states other than California. An individual who is married and whose spouse has owned a home during the past three years is similarly disqualified, whether or not the spouse's name will appear on the title of the new home.

Most types of residences qualify, including single family homes, mobile homes, and even houseboats, but regardless of the type of house, the owner must utilize the home as his or her primary residence for a period of at least two years following the purchase. If the owner leaves the residence before the two year period is up, the tax credit becomes null and the state will recoup the taxes in subsequent years.

The buyer must not have received any tax credit through the 2009 California homebuyer tax credit program. At the start of the program, however, applicants could receive credit through the $8000 federal homebuyer tax credit extension as well as the California program. The overlap caused some controversy and allowed some homebuyers to double-dip and claim up to $18000 of tax credit.

Qualification requirements for the California new home tax credit program are similar. The same types of residences may be considered, and the owner must live in the residence for at least two years upon purchase. For this portion of the program, however, the seller of the home must certify that it has not been previously occupied at any point in the past.

This excludes homes that are vacant due to foreclosure, as these homes have been previously occupied. The state hopes that this program will incentive new development. Though new home sales decreased in May when the bill took effect, applications for the credit have increased, which could indicate higher sales on the horizon.

Refer to the Franchise Tax Board Website for complete information on both programs, including downloadable application forms and application instructions.

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