A new bill is on the CA Governor’s desk awaiting signature which will enact a modified version of last year’s New Home Credit. The bill provides CA tax credits for first-time home buyers and taxpayers buying homes that have never been occupied.
Taxpayers who purchase a “qualified principal residence” on or after May 1, 2010 and before January 1, 2011, will be allowed a credit equal to the lesser of 5% of the purchase price of the home or $10,000. The credit is also available to taxpayers who enter into an enforceable contract during the applicable time period, as long as the purchase is completed before August 1, 2011.
Like the prior New Home Credit, there are some requirements:
1) The home must be a “qualified principal residence”
2) The taxpayer must apply the credit in equal amounts over 3 successive tax years
3) The credits are non-refundable, will not reduce AMT & cannot be carried over
Another important point – the state has established a $100 million dollar limit for this credit, which will be used on a first-come, first-serve basis. In order to ensure you are able to utilize this credit, make those purchases soon! Once the total of $100 million in credits have been used by taxpayers, no more will be allowed, even if all other criteria are met.
Contact: Jeanette Anderson, CPA, CFE
Anderson Accountancy Corporation, (831) 688-1977
www.andersonaccountancycorp.com
