$10000 CA Tax Credit

The American Recovery and Reinvestment Act brought us an $8,000 Federal Tax Credit and higher loan limits.

The $10,000 California State Tax Credit came from SB 15 and was part of the State Budget compromise.

Put these programs together and you may be eligible to receive up to $18,000 in State and Federal Tax credits along with a higher conforming loan amount. Buyers are beginning to understand the potential of these stimulus packages.

In the first three (3) days of the $10,000 California State Tax Credit, the Franchise Tax Board received over 170 requests for certification of the tax credit. The amount requested was over $1.7 million! That’s a lot of buyers, paying a lot of attention to the new stimulus legislation!

President Barak Obama signed into law yesterday H.R. 1, The American Recovery and Reinvestment Act of 2009. As part of the new law, first time home buyers will be provided up to an $8,000 tax credit. The credit will be available to those home purchasers that close escrow on a home between January 1, 2009 and December 1, 2009.

This is a true credit, refundable to those taxpayers that have less than $8,000 in tax liability. That means the IRS will give you $8,000 to help pay your taxes in 2009, for buying a home in 2009. If you owe the IRS $9,000 for your 2009 taxes, you will only have to send them $1,000. If you owe the IRS $2,000 for your 2009 taxes, the IRS will send you $6,000, if you buy a home in 2009. What a great deal! There are some restrictions that home buyers should be aware of:

1. The credit can not be used as part of your down payment and you still have to qualify for a loan.

2. There are income limitations for the purchasers, $75,000 for an individual or $150,000 for a couple. Partial credits may be available if you exceed the maximum income limits.

3. The Tax credit is for 10% of the home’s value, up to $8,000. And, it may be used to buy a new, resale or foreclosed home.

4. You must be a first time home buyer. By definition, this means you (and your spouse, if buying jointly) must not have been a home owner for the past 3 years.

There are other provisions in the American Recovery and Investment Act of 2009 that home buyers might want to be aware of:

1. The new law extends the higher Fannie Mae and Freddie Mac conforming loan rates from 2008 thru December 31, 2009, check with your lender for specifics of loan limits in your area.

2. Extends tax credits for energy efficiency home improvements.

3. Provides a “patch” for the Alternative Minimum Tax rules for 2009.

More information will become available over the next couple of weeks. Watch this blog for future updates. Until then, good luck and good shopping for that new home!