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Window Closing On State Tax Credit

Wednesday, July 14, 2010

The window is closing for prospective California buyers who may be able to take advantage of the opportunity for the state tax credit. Earlier this year, California created two state tax credit programs, each with a $100 million allotment. As of last week, one of the programs received more applications for tax credits than funded, lowering, but not eliminating, the possibility of more first-time home buyer credit allocations being issued.

The first state tax credit program offers a $10,000 tax credit to first-time home buyers who purchase homes between May 1 and December 31, 2010. The second program offers a $10,000 tax credit to buyers who purchase newly-built homes after May 1, 2010 and before August 1, 2011.

"Buyers need to be aware that the funds for the state's tax credit programs are limited, that there are specific requirements for each program and that they need to act quickly to take advantage of this opportunity," said Jeff Bell, president of the Silicon Valley Association of REALTORS®.

As of July 7, the state already has received over 8,800 new home credit applications and reservation requests amounting to $57 million of the $100 million allotment, and about 23,000 first-time buyer applications amounting to more than the $100 million allotment. The numbers are just estimates, according to the California Franchise Tax Board. The board is still accepting applications because it expects a number of duplicate, revised or invalid applications will be denied.

Buyers are eligible for the first-time buyer program if they haven't owned a home in California for three years prior to the purchase date. The property must be eligible for the property tax homeowner's exemption, and occupied as a principal residence for a minimum of two years immediately following the purchase. Buyers are eligible for the new-home credit if the home they purchase is a single-family home or condo that has never been occupied. The same tax-exemption eligibility rules apply.

The state tax credits are available for buyers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011 (the purchase date is defined as the date escrow closes). If funds are still available, additional New Home Credit can be allocated for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. Those who received a new home tax credit in 2009 are ineligible to apply for the state tax credit.

Home buyers may apply for the tax credit by faxing their application no more than 14 calendar days after they close escrow. The tax credit is allocated on a first-come, first-served basis, based on the time and date the faxed application is received. The cutoff date for applications will be posted on the FTB website 24 hours prior to its going into effect, to give applicants time to fax their application.

For more information about the state tax credits and list of requirements and qualifications, visit www.ftb.ca.gov


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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