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3/20/09

New $10,000 Tax Credit for New Home Buyers in California

California lawmakers approved a new budget that included a $10,000 tax credit for home buyers, the largest home-buyer incentive ever offered in US history to date. Here's what you need to know. The $10,000 tax credit is for any home buyers that purchase a new home between March 1, 2009 and March 1, 2010.

• This is NOT limited to first-time buyers;
• There is NO income limitation; and most importantly
• You do NOT have to pay it back, as long as you remain in the home for 2 years.

The bill, however, only set aside $100 million for this tax credit, so after 10,000 new homes are purchased, the credit is gone – so don't wait.

The credit CAN be utilized along with the new $8,000 first-time home buyer's credit made available by the new Stimulus Plan.

This means that if you're a first-time home buyer, and you purchase a qualified new home in California that costs more than $200,000, you'll get $18,000 in tax credits that you do not have to pay back, if you're a first-time home buyer and you purchase a new home that remains your primary residence for three years.

It's important to note that qualified home buyers will receive the tax credit, in equal amounts, over 3-years. If your tax credit is $7,500, you will receive a tax credit of $2,500 each year for three years. If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.

Finally, there is no down payment requirement to receive the $10,000 tax credit, although you will likely have a down payment requirement to secure a mortgage in today's market, at least 3.5% if you use FHA financing. The good news is the Stimulus Plan also restored the higher maximum loan limits of $729,750 for FHA and conventional loans for 2009.

2/15/09
The current $789B stimulus bill is expected to be passed today by Congress and be on President Obama's desk to sign into law this weekend.  Stocks remain under pressure as many investors feel the plan will take some time before it has an impact on the economy. 

Here are some of the details regarding the tax credit that have been released so far - The tax credit has been scaled down to $8,000 from $15,000, or 10% of the value of the home for any first time homebuyers who purchase homes from the start of the year until the end of November.  It starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit if they sell their homes within three years.  More details are to come!!

*The Economic Stimulus Act of 2008 will allow HUD's Federal Housing Administration (FHA) to temporarily increase its loan limits and insure larger mortgages at a more affordable price in high cost areas of the country.  The maximum loan amount for San Bernardino and Riverside County is $500,000 and for Los Angeles County and Orange County it is $729,750.  See News Release.

*If you purchased a property within the last 3 years, you may be able to save on taxes by submitting a Decline-In-Value Reassessment Application to your County Assessor's Office.