$10000 tax credit from May 1

[wbbuyer]

Another round of $10000 credit.
http://blogs.wsj.com/developments/2010/03/23/california-to-home-buyers-heres-10000/

My closing date is one week before May 1    . Looks that I need to pay builder penalty to get this credit. Any one
plans to do the same?

 

[fe9000]

Yikes!!!  My closing date is also 1.5 week before May 1st.  Well, I am not a first time home buyer though.

 

[wbbuyer]

It doesn't matter. Either first time buyer or buying a new home will be qualified for the $10,000.

 

[fe9000]

Wow, really?  I will have to look into this more.  Thank you for the info.  Where are you buying if I may ask?

 

[mikeirvine]

Wonder will there be a cap as my new home will be around 980k  :-*......

 

[wbbuyer]

I buy in motorcourt. 
The tax credit shall have no price cap. Here is the link to the billhttp://blog.paris911.com/files/2010/03/ab_183_bill_20100322_enrolled.pdf

 

[sgip]

1/2 of the $200m is for New Construction with the other 1/2 for resale. I believe it's based on the date of the contract, not the date of the closing. You could ask the builder to re-write the contract but you'd have to check on any overlap between the Fed $8k and the Cali $10k. Remember the Cali $10k is $3,333 per year for 3 years also.

My .02c

Soylent Green Is People

 

[irvinehomeowner]

So is this just an extension of the one that went from March 1, 2009 to March  1, 2010?

And has this been passed yet?

(I actually don't remember the previous 10k credit until I started Googling for this one)

 

[irvinehomeowner]

I guess I didn't remember it because it ran out 8 months ago.

How fast do you think this new one will last?

 

[usctrojancpa]

Oh great, more market intervention and this coming from a State who can barely pay its bills and can't print money to pay for it.  :  When will this crap end so the market can get back to where it should be.  I can't stand how they are trying to game the system with our hard earned tax dollars. 

 

[fe9000]

So I get the double whammy of not getting anything...  We sold our home last Dec which we owned it for 4 years...  $6500 out the door...  Now this, closing escrow on or after May 1st...  Our escrow date is 4/21...  $10,000 out the door...  Boy are we lucky!!!  :-(

 

[usctrojancpa]

So I get the double whammy of not getting anything...  We sold our home last Dec which we owned it for 4 years...  $6500 out the door...  Now this, closing escrow on or after May 1st...  Our escrow date is 4/21...  $10,000 out the door...  Boy are we lucky!!!  :-(

Tell the builder you will not close until May 1st.  The worst that they will do is charge you like $50-$100/day in penalties for not closing on 4/21/10.  They should be pretty understanding given this recent development.

 

[waitin4ever]

So which one is correct.

A contract after may 1st or a close date after may 1st for the 10K state credit. if it is contract signed after may 1st then
that may qualify all 2010 home collection buyers for only FED 8K or State 10K tax credit.

I know for sure  that for the 8K federal it is contract before april 30th and close before june 30th.

So I get the double whammy of not getting anything...  We sold our home last Dec which we owned it for 4 years...  $6500 out the door...  Now this, closing escrow on or after May 1st...  Our escrow date is 4/21...  $10,000 out the door...  Boy are we lucky!!!  :-(

Tell the builder you will not close until May 1st.  The worst that they will do is charge you like $50-$100/day in penalties for not closing on 4/21/10.  They should be pretty understanding given this recent development.

 

[usctrojancpa]

So which one is correct.

A contract after may 1st or a close date after may 1st for the 10K state credit. if it is contract signed after may 1st then
that may qualify all 2010 home collection buyers for only FED 8K or State 10K tax credit.

I know for sure  that for the 8K federal it is contract before april 30th and close before june 30th.

So I get the double whammy of not getting anything...  We sold our home last Dec which we owned it for 4 years...  $6500 out the door...  Now this, closing escrow on or after May 1st...  Our escrow date is 4/21...  $10,000 out the door...  Boy are we lucky!!!  :-(

Tell the builder you will not close until May 1st.  The worst that they will do is charge you like $50-$100/day in penalties for not closing on 4/21/10.  They should be pretty understanding given this recent development.

I've read both the Federal and the State tax credit language.  For the Federal credit you need to be under contract on or before 4/30/10 and CLOSE escrow on or before 6/30/10.  There are income limitations (AGI) and home price limitations ($800k and under only for the Federal tax credit.  As for the State credit, you have to CLOSE 5/1/10 through 12/31/10 (the credit will be used up quick for re-sales and probably in 5-6 months for new home sales).  There is no language about when you need to get under contract and there are no income limitations and no home price limitations (although it is the lessor of 5% of the purchase price or $10,000).  It also appears that the State credit will be spread out over 3 years.

 

[wbbuyer]

my builder penalty is 250/day. Pretty steep. But still worth it compared with 10k. BTW, Do I need to pay federal tax for this 10k?

 

[waitin4ever]

Helps to have a CPA in the who understands peoples doubts/ housing business clearly.

Thanks so much for your quick response.

So which one is correct.

A contract after may 1st or a close date after may 1st for the 10K state credit. if it is contract signed after may 1st then
that may qualify all 2010 home collection buyers for only FED 8K or State 10K tax credit.

I know for sure  that for the 8K federal it is contract before april 30th and close before june 30th.

So I get the double whammy of not getting anything...  We sold our home last Dec which we owned it for 4 years...  $6500 out the door...  Now this, closing escrow on or after May 1st...  Our escrow date is 4/21...  $10,000 out the door...  Boy are we lucky!!!  :-(

Tell the builder you will not close until May 1st.  The worst that they will do is charge you like $50-$100/day in penalties for not closing on 4/21/10.  They should be pretty understanding given this recent development.

I've read both the Federal and the State tax credit language.  For the Federal credit you need to be under contract on or before 4/30/10 and CLOSE escrow on or before 6/30/10.  There are income limitations (AGI) and home price limitations ($800k and under only for the Federal tax credit.  As for the State credit, you have to CLOSE 5/1/10 through 12/31/10 (the credit will be used up quick for re-sales and probably in 5-6 months for new home sales).  There is no language about when you need to get under contract and there are no income limitations and no home price limitations (although it is the lessor of 5% of the purchase price or $10,000).  It also appears that the State credit will be spread out over 3 years.

 

[usctrojancpa]

my builder penalty is 250/day. Pretty steep. But still worth it compared with 10k. BTW, Do I need to pay federal tax for this 10k?

The answer is sorta....because the amount is a tax credit it will reduce your California state income tax deduction that you take on your Schedule A on your 1040.  If you do not itemize then it will depend on whether the State sends your their version of a 1099 showing the state tax credit as a refund.  If they send it to you then you will have to show that refund as income on your 1040.  I would call the builder/salesperson and make them aware of this tax credit and request to move back the closing date by 1-2 weeks...if they are reasonable they'll grant your request.

 

[irvinehomeowner]

The bullet points of the OC Register article explain it pretty well:

Under the provisions, the bill:

    * Provides a 5% tax credit, up to a $10,000 limit, to all buyers of new, never-occupied homes.
    * Provides a 5% tax credit, up to a $10,000 limit, to first-time buyers of existing homes.
    * Sets aside $100 million for each program, for a total of $200 million.
    * Requires buyers to close escrow between May 1 and Dec. 31 to qualify. New-home buyers have until Dec. 31 to sign a purchase contract, then must close escrow by Aug. 16, 2011.
    * Requires buyers to live in the home for at least two years.
    * Provides for the tax credit to be paid in thirds over a three-year period.
    * Sets no income limitations on buyers.
    * Requires buyers to repay the tax if they fail to live in the home for two years or fail to close escrow on a new home by Aug. 16, 2011.

 

[waitin4ever]

So here is the clarification. You can only get Fed or the state tax credit. Fed 8K requires contract signed on or before April 30th.
Sate require contract signed may 1st or later. (not just the escrow date after may 1st). this clarification came from the builders.

No wonder the state credit is timed so perfectly. Govt. can't be sweetening the deal so much!!!!

The bullet points of the OC Register article explain it pretty well:

Under the provisions, the bill:

    * Provides a 5% tax credit, up to a $10,000 limit, to all buyers of new, never-occupied homes.
    * Provides a 5% tax credit, up to a $10,000 limit, to first-time buyers of existing homes.
    * Sets aside $100 million for each program, for a total of $200 million.
    * Requires buyers to close escrow between May 1 and Dec. 31 to qualify. New-home buyers have until Dec. 31 to sign a purchase contract, then must close escrow by Aug. 16, 2011.
    * Requires buyers to live in the home for at least two years.
    * Provides for the tax credit to be paid in thirds over a three-year period.
    * Sets no income limitations on buyers.
    * Requires buyers to repay the tax if they fail to live in the home for two years or fail to close escrow on a new home by Aug. 16, 2011.

 

[fe9000]

Yeah, I am afraid waitin4ever is correct.  There may be some clarifications coming out from OC Register.  Here is another link that I found.
http://www.cbia.org/go/cbia/government-affairs/homebuyer-tax-credit/homebuyer-tax-credit-faq/

One of the FAQ:

How does a homebuyer qualify?
Once a customer signs a contract to purchase a home, they are allowed to reserve a tax credit provided the contract is entered into on or after May 1. The state?s Franchise Tax Board (FTB) allocates the credits on a first-come, first-served basis. The homebuyer may submit a certification to the FTB upon entering into a sales contract, and must submit a properly executed settlement statement to the FTB within two weeks of close of escrow. In order to receive the tax credit, escrow must close no later than Dec. 31, 2010, unless a credit has been reserved prior to that date, in which case the home must close escrow before Aug. 1, 2011.