7,090 of the applications are the result of a closed escrow on a new home. These are direct applications for a tax credit allocation. 3,720 of the applications are for reservations of a tax credit and while they are assumed to count against the total allocation, they do not rise to an actual allocation of tax credit until the reserved home closes escrow.

According to the FTB, “(t)he numbers are overstated as there will be duplicate, revised, and invalid applications included as we have not verified any of the applications. In addition, some purchases may be included twice if we have received both a reservation request and an application for the purchase.” And, “(o)nce we determine that we have received sufficient applications and reservation requests to allocate the full $100 million, we will stop accepting reservation requests and applications for the New Home Credit.”

At the current rate of requests, it is likely the FTB will continue to take requests for allocations and reservations of allocations into the middle of September. That means today is a great day to explore the benefits of buying a new home. With historically low mortgage rates, very high affordability rates, and the addition of up to $10,000 in California Tax Credits, buying a new home today is a financially smart decision.

Please visit a Brookfield new homes community and let our professional sales counselors “show you the numbers”!

“(a)s shown in the numbers below, (has) received First-Time Buyer applications totaling more than $100 million. However, since many of these are duplicate, revised or invalid applications, we will accept at least 28,000 applications. This will insure that we have enough valid applications to allocate the full $100 million. These additional applications will be subject to the availability of remaining credits. We will only issue approved certificates of allocation until the $100 million is exhausted. (Updated 07/01/10) ”

“Once we estimate that we have received 25,000 First-Time Buyer applications, we will update this page each business day with the estimated total number of First-Time Buyer applications received. We will announce the cut-off date on this webpage at least one full day before we stop accepting First-Time Buyer applications. (Updated 07/08/10)”

“We have not processed any applications yet as our computer system is still being developed. Once our computer system is completed, we will provide weekly updates on the number of certificates that have been mailed and the amount of credits that have been allocated. (Updated 06/17/10) ”

The FTB says they received 20,760 requests thru June 29, 2010 for a total requested amount of $105,898,000. And, that thru July 6, 2010, they have received an additional 2,920 requests, bringing the total number of requests to 23,680. The 25,000 request level should occur during the week of July 12th and the 28,000 request level should occur during the week of July 19th.

Request applications can only be made after the close of escrow by a first time home buyer.

For the 2010 California Tax Credit for New Home Purchases, 8,800 total applications for a tax credit application have been received. This number includes 5,950 applications for a tax credit and 2,850 applications for a reservation of a tax credit. The total dollar amount for the 8,800 applications is $57,191,000. This as an average of 880 applications per week. At this rate the $100,000,000 tax credit allocation could last until the end of August.

The new home tax credit is not moving as quickly as the first time home buyer tax credit, but this was assumed when the program was created. First time home buyers are finding today’s low prices and very low interest rates too hard to pass up. While new home buyers tend to be move up buyers and that means they generally will have a home to sell before they can purchase a new home. The extended period of time necessary to sell an existing home, then purchase and close escrow on a new home is considerably longer, hence the slower absorption of the tax credits.

Even with all that additional time and effort, given today’s very low (historically low!) mortgage rates and today’s high affordability index, it is still a great time to be looking at a new home purchase. New homes today are a very smart buy!

As of June 15th, the Franchise Tax Board reports they have received 15,220 applications for $78,108,000 of California Tax Credit allocation. At the current rate of applications, the $100,000,000 total allocation could be utilized by early July. However, according to the FTB, “The numbers are overstated as there will be duplicate, revised, and invalid applications included as we have not verified any of the applications. In addition, some purchases may be included twice if we have received both a reservation request and an application for the purchase.”

To help ease the confusion, the FTB has stated they will “…accept at least 28,000 applications…” before the close the program. And, that they will “… announce the cut-off date on this webpage at least one full day before we stop accepting First-Time Buyer applications.” That is good news for First Time Home Buyers in escrow today. It means they may have as much as six more weeks to close escrow and apply for the tax credit, with some hope of getting an allocation.

Unfortunately, the same can not be said for the New Home Buyers Tax Credit. After 6 weeks, only 5,630 New Home Buyers have applied for an allocation or reservation of the 2010 California Tax Credit. These buyers have only used $36,360,000 of their $100,000,000 allocation of tax credit. About one third of the total allocation has been requested or reserved in six weeks. This slower showing is supported by recent news of a home sales slow down in May.

While First Time Home Buyers must have made their purchase decision prior to May 1, 2010 to achieve a closing and hence a request for a tax credit allocation, the New Home Buyer could have been in escrow (approximately 3,700 of them were). But, for those requesting a reservation of the allocation (only 1,930), they must have entered escrow after May 1st. New home sales of only 1,930 in the past six weeks is evidence of the slow down noted in today’s headlines.

The closing of the Federal Tax Credit for home purchases on April 30, 2010, may also be providing some confusion for new home buyers. Or, it may have provided incentive for new home buyers to purchase their homes in March or April to beat the deadline. In either case, First Time Home Buyers are rushing to take advantage of the 2010 California Tax Credit, but New Home purchasers don’t seem to be as motivated.

The FTB will continue to provide updates on the number of applications for the tax credit they receive on their web site. The updates are usually posted weekly.

The 2010 California First-Time Home Buyers Tax Credit is limited to purchases of resale homes only and the application for the tax credit my only be submitted after the close of escrow. For more information on eligibility and instructions on how to file for the tax credit application, please visit the FTB web site.

The 2010 California New Home / First-Time Tax Credits are now available on a first come, first served basis. If you are unsure of how to apply, if you qualify to apply or what the tax credit could mean to you, I have prepared the following summary and provided the necessary links for your review.

Here is a summary of the 2010 California Tax Credit:

1. The purchase of a qualified principal residence on or after May 1, 2010 and on or before December 31, 2010 and close escrow before August 1, 2011, pursuant to a contract executed on or before December 31, 2010, on a first come, first served basis or until the allocation of $200,000,000 is exhausted in accordance with terms of this legislation. (It is likely that the allocation of tax credit will be fully claimed prior to the time limits described above!)

2. Up to $10,000 of California Tax Credit, per qualified purchaser, to be allocated over three years, beginning with the year the escrow closes on the new home.

3. The total allocation of $200,000,000 in tax credits is divided between first time home buyers and purchasers of new homes, with $100,000,000 being allocated to each type of purchaser.

4. The reservation of a tax credit may be achieved by submitting a jointly signed certification to the Franchise Tax Board (FTB) at the time of execution of the contract to purchase. The FTB has created the necessary forms (Form 3549-A is to be used for New Home and First-Time Buyer tax credit applications after the close of escrow. Form 3549-RR is to be used by buyers of a new home, requesting a reservation of a tax credit.) The procedures for claiming the reservation of the tax credit and the allocation of a tax credit are further explained on the FTB web site.

5. A “qualified principal residence” is an attached or detached home that will be used as the principal residence of the purchaser, and has either never been occupied or is purchased by a first time home buyer.

6. A “first time home buyer” is and individual who has no present ownership interest in a principal residence now or over the three previous year period, ending on the date of purchase.

7. The tax credit is non-refundable, meaning it is a use it or lose it credit. You would need to have $3,333 of state tax liability each of the next three years to utilize the maximum amount of the credit available.

8. The amount of the tax credit is the lesser of 5% of the purchase price or $10,000, which means any home over $200,000 in price will be limited to the $10,000 credit.

9. You must be 18 years of age and not claimed as a dependent on someone else’s tax return to be eligible to claim this tax credit.

10. For the answers to more specific questions, try the FAQ set up by the FTB for this Tax Credit.

I hope this information is helpful. The California Tax Credit in 2009 was very successful and lasted only 4 months! With the provision of the reservation system in the 2010 California Tax Credit, the $100 million allocation may not even last that long. So, if you are interested, if you qualify, I highly recommend you take advantage of this program as soon as possible.

The FTB has also updated their Frequently Asked Questions list as of May 6, 2010. Some of the new questions address the information First Time Buyers need to provide on the the Form 3549-A. If you are applying for a First Time Buyers Tax Credit, please refer to these questions as you complete your form.

You may find the FAQ by following the link provided.

Remember, the 2010 California Home Buyers Tax Credit becomes available starting tomorrow, May 1, 2010 and will be allocated on a first come, first served basis. There are two different tax credit allocations available, $100 million for the purchasers of newly constructed homes, and $100 million for first time home buyers, purchasing a resale home. Details of each program can be found at FTB 2010 Tax Credit for New Home / First Time Buyer web page.

Good luck and happy house hunting.

The Franchise Tax Board (FTB) has posted the new Application (Form 3549-A) and Reservation Request (Form 3549-RR) forms on their web site. They have also updated their directions on how to apply for the tax credit and how to apply for a reservation of the tax credit. In summary, these directions are:

To Apply for the Tax Credit Allocation:

1. Applications will only be accepted by fax beginning May 1, 2010.

2. Use the new, 2010 Application Form. Do not use the 2009 application form!

3. Within 14 calendar days after the close of escrow, the seller must complete Parts II, III and IV of the 2010 Application Form and provide a copy of the completed form to the buyer or escrow agent.

4. The buyer must complete Parts I, V & VI of the form.

5. Fax the form to the FTB at 916-855-5577 with a copy of the settlement statement.

6. Fax submittal is the only accepted method of application!

To Apply for a Tax Credit Reservation:

1. Applications will only be accepted by fax beginning May 1, 2010.

2. Use only the FTB approved Reservation Request Form.

3. The seller must complete Parts I, II & III.

4. The buyer must complete Parts IV & V.

5. Fax the form to the FTB at 916-855-5577 with the required pages of the purchase agreement. Do not fax the entire purchase agreement, only the pages which show the Property address, Buyer’s name, Seller’s name, Purchase Price, Deposit Amount, Buyer’s signature and Seller’s signature.

6. Fax submittal is the only accepted method of application!

For more information and details about the process, please read carefully the FTB 2010 Tax Credit for New Homes web site.

Good luck and good buying!

This is not a surprise, as the first time home buyer process only applies to homes from the resale market.  The first time home buyers allocation will be based solely on the close of escrow and be administered on a first come first served basis.

The new home tax credit allocation will include a reservation process.  The reservation system is allowed, but not required.  In the circumstance where a first time home buyer is purchasing a newly constructed home, their tax credit allocation will come from the new home allocation monies.

It appears the Legislature is responding to the Governor’s call for quick action on bills that promote job growth and provide economic stimulus. AB 183 has been transformed to an appropriate legislative bill for tax credits for home purchasers from it’s earlier format. The new AB 183 follows closely the language of other pending bills (SBX8 21, Ashburn and ABX8 34 Jeffries) that are currently inactive.

The focus of AB 183 is the implementation of a new California Tax Credit for the purchase of a home. The particulars are as follows:

1. The purchase of a qualified principal residence on or after May 1, 2010 and on or before December 31, 2010 and before August 1, 2011, pursuant to a contract executed on or before December 31, 2010, on a first come, first served basis or until the allocation of $200,000,000 is exhausted in accordance with terms of this legislation.

2. Up to $10,000 of California Tax Credit, per qualified purchaser, to be allocated over three years, beginning with the year the escrow closes on the new home.

3. The total allocation of $200,000,000 in tax credits is divided between first time home buyers and purchasers of new homes, with $100,000,000 being allocated to each type of purchaser.

4. The reservation of a tax credit may be achieved by submitting a jointly signed certification to the Franchise Tax Board (FTB) at the time of execution of the contract to purchase. The FTB shall be responsible for creating the necessary forms and procedures for claiming the reservation of the tax credit. The tax credit is then allocated to the purchaser by submitting evidence of a certification of the close of escrow on the reserved tax credit residence.

5. A “qualified principal residence” is an attached or detached home that will be used as the principal residence of the purchaser, and has either never been occupied or is purchased by a first time home buyer.

6. A “first time home buyer” is and individual who has no present ownership interest in a principal residence now or over the three previous year period, ending on the date of purchase.

7. The tax credit is non-refundable, meaning it is a use it or lose it credit. You would need to have $3,333 of state tax liability each of the next three years to utilize the maximum amount of the credit available.

8. The amount of the tax credit is the lesser of 5% of the purchase price or $10,000, which means any home over $200,000 in price will be limited to the $10,000 credit.

9. You must be 18 years of age and not claimed as a dependent on someone else’s tax return to be eligible to claim this tax credit.

10. Because of the way FTB will calculate the number of individual purchases available to receive the tax credit, it is estimated that approximately 14,250 new home purchasers and 17,500 first time home buyers will be eligible for the 2010 California Tax Credit.

There are a number of rules, forms and procedures that will need to be created by the FTB for the regulation of this tax credit program. And, all these specific points regarding this legislation are preliminary, subject to change and still in draft form until the Governor signs the final language of the bill!

The question most consistently asked about the “interim period” between the New Home Buyer Tax Credit of 2009 and the adoption of this new 2010 Home Buyer Tax Credit appear to be answered by the legislation decision not to address the issue. That is, if you were disallowed a tax credit in July of 2009, because the FTB ran out of credit, or if you purchased and closed on a home between the middle of July 2009 and May 1, 2010, this legislation does not authorize the purchaser to receive a tax credit. The only avenue available to such a purchaser appears to be the Federal Tax Credit program.

And finally, today’s vote was very important, but three hurdles remain. First, a vote on the Senate floor. Second, a re-affirmation vote by the Assembly. And third, approval and signature by the Governor of the final legislation. Stay tuned for more updates.