$10,000 Credit for Purchasing New Construction

I am working with a first-time buyer family who is considering purchasing new construction as their primary residence.  I advised them to look into the $10,000 tax credit offered by the State of California Franchise Tax Board.  For all the info and requirements click on this Franchise Tax Board webpage.  There is no income limitation on this tax credit.

One of the most important aspects of this credit to keep in mind is that it must be applied for within one week of close of escrow.  This credit is limited to the first 10,000 new construction homes sold in California between March 1, 2009 and March 1, 2010.  It is given on a first-come first-served basis.  As of this morning when I checked the Franchise Tax Board link given above, there were 4,880 applications received by the Board, and it’s only May 2nd.  Better hurry if you want to take advantage of this!

1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.

2. The tax credit is for new homes only.

3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.

4. Home buyers will receive the tax credit, in equal amounts, over 3-years.

5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.

6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.

7. The tax credit only applies if the purchased home is your primary residence.

8. There is no down payment requirement to receive the $10,000 tax credit.

9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.

10. The tax credit is limited to the first 10,000 new home purchases.