Tax Credit Update!! (Hurry!!)

 

Homebuyer Tax Credit Chart 2010 

find the article at: 

http://www.car.org/legal/legal-questions-answers/2010-qa/homebuyer-tax-credit-2010/” 

  

March 30, 2010 (revised) 

To help stimulate home sales, both the federal and state governments are offering tax credits for 

Californians purchasing their piece of the American dream. Federal law offers up to $8,000 for firsttime 

homebuyers and $6,500 for long-time residents. California law offers up to $10,000 for firsttime 

homebuyers or buyers of properties that have never been occupied. Here’s a handy summary 

of the two tax credit laws: 

HOMEBUYER 

TAX CREDIT FEDERAL CALIFORNIA 

Amount of Tax 

Credit 10% of purchase price not to exceed 

$8,000 for First-Time Homebuyers or 

$6,500 for Long-Term Residents. 

5% of purchase price, not to exceed 

$10,000 for first-time homebuyers or 

buyers of properties that have never 

been occupied. (See also Maximum 

Credit for All Taxpayers.) 

Date of 

Purchase 

By June 30, 2010, but taxpayer must 

enter into a written binding contract by 

April 30, 2010. 

From May 1, 2010 to July 31, 2011, 

but an enforceable contract must be 

executed by December 31, 2010. 

Principal 

Residence Yes. Property purchased must be the 

taxpayer’s principal residence which is 

generally the home the taxpayer lives in 

most of the time (26 U.S.C. § 121). 

Yes. Property purchased must be a 

qualified principal residence and 

eligible for the homeowner’s 

exemption from property taxes (Cal. 

Tax & Rev. Code § 218). 

Type of Property House, condominium, townhome, 

manufactured home, apartment 

cooperative, houseboat, housetrailer, or 

other type of property located in the U.S. 

Single-family residence, whether 

detached or attached. 

Home Page > Legal > All Legal Q&As > 2010 Q&As > Homebuyer Tax Credit Chart 2010 

Eligibility 

1. First-Time Homebuyer: Up to $8,000 if 

buyer (and buyer’s spouse if any) has not 

owned a principal residence during the 

three-year period before date of 

purchase; OR 

2. Long-Time Resident: Up to $6,500 if 

buyer (and buyer’s spouse if any) has 

owned and used existing home as a 

principal residence for 5 of the last 8 

years. 

1. First-Time Homebuyer: Up to 

$10,000 if the buyer (or buyer’s 

spouse if any) has not owned a 

principal residence during the threeyear 

period before date of purchase; 

OR 

2. Never-Occupied Property: Up to 

$10,000 for a principal residence if 

the property has never been 

previously occupied as certified by the 

seller. 

Income 

Restriction 

Yes. Tax credit begins to phase out for 

modified adjusted gross income (MAGI) 

over $125,000 (or $225,000 for joint 

filers). No tax credit at all for MAGI over 

$145,000 (or $245,000 for joint filers). 

No 

Maximum 

Purchase Price $800,000. N/A 

Refundable Yes. Any amount of the tax credit not 

used to reduce the tax owed may be 

added to the taxpayer’s tax refund check. 

No 

Repayment No repayment required if the buyer owns 

and occupies the property for at least 36 

months after purchase. 

No repayment required if the buyer 

owns and occupies the property for at 

least two years immediately following 

the purchase. 

Multiple Buyers 

(not married to 

each other) 

Tax credit may be allocated between 

eligible taxpayers in any reasonable 

manner. 

Tax credit must be allocated between 

eligible taxpayers based on their 

percentage of ownership. 

Maximum Credit 

for All Taxpayers N/A 

$100 million for first-time homebuyers 

and $100 million for never-occupied 

properties, both on a first-come-firstserved 

basis. 

Reservations of 

Credit 

N/A 

Yes. Buyer may reserve credit before 

close of escrow for a property that 

has never been occupied by 

submitting a certification signed by 

buyer and seller stating they have 

entered into an enforceable contract 

between May 1, 2010 and December 

31, 2010, inclusive. 

When to Claim 

Full tax credit may be claimed on 2009 or 

2010 tax returns. 

1/3 of total tax credit may be claimed 

each year for 3 successive years (e.g. 

$3,333 for 2010, $3,333 for 2011, and 

$3,333 for 2012). 

Tax Agency Internal Revenue Service (IRS). Franchise Tax Board (FTB). 

How to File First-Time Homebuyer Credit and 

Repayment of the Credit (IRS Form 

5405) to be filed with tax returns 

Submit application to the FTB to 

obtain Certificate of Allocation. The 

FTB may prescribe additional rules 

and procedures to carry out this law. 

Other 

Restrictions 

Cannot be an acquisition from related 

persons as defined; cannot be an 

acquisition by gift or inheritance; and 

buyer cannot be a non resident alien. 

Cannot be an acquisition from related 

persons as defined; buyer or spouse 

must be 18 years old; buyer cannot 

be another taxpayer’s dependent; 

credit is allowed for only one qualified 

principal residence; and credit 

allowed cannot be a business credit 

under Cal. Tax & Rev. Code § 

17039.2. 

Legal Authority 

26 U.S.C. section 36. 

Cal. Rev. & Tax Code section 

17059.1 (as added by Assembly Bill 

183). 

Date of 

Enactment November 6, 2009 (as revised). March 25, 2010More Information IRS Web site  

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