Ask an Expert, Big Bear Real Estate

Brutally Honest Big Bear Real Estate

California Passes Home Buyer Tax Credit AB183

AB 183 will provide $200 million for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

The positive impact of the federal home buyer tax credit is clear. Nearly 40 percent of first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered, according to C.A.R. research conducted last year.

The state’s previous home buyer tax credit program was so successful that it ran out of tax credits by the end of June 2009, eight months before it was set to expire and just as housing markets appeared to be turning a corner. Unlike last year’s legislation, AB 183 adds a tax credit for the purchase of an existing home by a first-time home buyer.

AB 183 will significantly contribute to the effort to stimulate jobs-creation within California’s housing market by helping to incentivize first-time home buyers to purchase homes that have been abandoned, foreclosed upon and returned to the lender, or have been sitting on the market for extended periods of time. It is these homes that will require substantial rehabilitation by the new owners, which will in turn generate a tremendous increase in jobs and accessory purchases connected to home improvement activities.

“Information provided by California Association of Realtors”

Advertisements

March 25, 2010 - Posted by | Big Bear Real Estate, Real Estate |

15 Comments »

  1. nice site… very interesting!!thanks for your info bro..

    Comment by cahbagoes | March 25, 2010 | Reply

  2. AB 83 states: “the eligible taxpayer who purchases”; what is the purchase date? The date escrow is closed? Does this mean that someone could start escrow on April 15, close escrow on May 15 and qualify for both the Federal tax refund ($8000) and the CA first time buyers tax credit?

    Comment by Angela | March 26, 2010 | Reply

    • The AB 183 first purchase date is May 1, 2010. This is the date of the contract. You would not be able to qualify for both since the Federal Program ends with contracts dated no later than April 30th.

      Comment by Steve | March 26, 2010 | Reply

      • http://www.legisweb.com/app/pkgs/calm/Retrieve.asp?ref=urn%3Acalm%3A2009%3Aab0183%3Adoc

        Just wanted to let you know that I did some more research on AB 183 and I have attached the bill from LegisWeb. In section 17059.1 (a) (4) it states that “A qualified principal residence is purchased on the date on which escrow closes with respect to the purchase of the qualified principal residence”. So there is a small window in which one could qualify for both the Federal refund and State tax credit by starting escrow on/before April 30 and closing on/by June 30th.

        Comment by Angela | March 29, 2010

      • I would definitely refer you to a tax specialist, but this is what the link says that leads me to believe your contract must be after 5/1/2010.

        “To reserve a credit, the taxpayer and seller shall jointly sign and submit to the Franchise Tax Board a certification that they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010.”

        I think the federal program require that you have a contract dated on or before 4/30/2010.

        Update!!!
        You were correct! I have posted a new blog post today 3/31/2010 with details for the limited window to take advantage of both credits.

        Comment by Steve | March 29, 2010

  3. HI Steve,
    My wife and I plan on purchasing a home between 5/1/2010 till the end of the year. She and her sister is a co-owner a condo however (owned for over 10 years); Would we still qualify for the first time homebuyer credit?

    Comment by Eddie Lin | March 26, 2010 | Reply

    • I don’t think you would qualify since your wife is an owner, but I really would check out the specifics with your accountant to be sure. I am not qualified to give tax advice.

      Comment by Steve | March 27, 2010 | Reply

  4. all taxable. for stimulate ecomonical rise. thanks for the info.

    Comment by hometownhostel.com | April 22, 2010 | Reply

  5. can i use the new 10000 tax credit towars my downpayment or closing costs??if not how do i receive the credit??cause i hear you dont get the money its only a tax credit
    thanks

    Comment by felipe her | May 2, 2010 | Reply

    • The credit is a tax credit, so it is not available to use towards your down payment or closing costs. You aren’t eligible to get the credit until after the home closes escrow.

      Comment by Steve | May 3, 2010 | Reply

  6. i just closed escrow 2 weeks ago…..
    what or how can i start???
    people were saying this extra 10k were only for new homes?

    Comment by FREDDY | July 2, 2010 | Reply

    • Freddy,
      You should contact your tax advisor to get the proper forms and to verify if you qualify.
      Steve

      Comment by Steve | July 2, 2010 | Reply

  7. The AB 183 was passed by the legislature on March 22 and gives the Franchise Tax Board authority to extend a total of $200 million in tax credits to California

    homebuyers; The credit will be extended from May 1, 2010 to December 31, 2010. The tax credit will be available to buyers on a first-come, first-served basis and

    is applied in equal amounts over a period of three taxable years.
     
    Yet the AB 183 does not say a limit 14 days after the closing of escrow.  At that time most people believe that it would be the same as  IRS Credit for first time

    home owner.
     
    I bought my first home and closed escrow account on 05/19/2010.  My realtor as well as the escrow employees did not know about this 14 days limit. No body told

    me about that until I visited FTB website on 06/07/2010. Even though, it was late 5 days, I faxed my application on that day. And my application was denied.
     
    There is only Website of  FTB saying about this limit.  The time from the date signed by Governor Schwarzenegger to the date my escrow closed was too short to

    spread the information of the 14 days limit imposed by FTB.  I believe it is unfair and unethical practice. It is unfair because it is not a first-come, first-served basis

    as the law said.  I submitted application and bought a house first, but my application was denied because 14 day limit. Whereas, other homeowners bought a

    house after me and submitted application after mine, but their application were approved.
      
    FTB should announce clearly and widely on radio, TV, not only on its website and should allow the time enough for the information reach the recipients.   
    FTB should do more and clear because normal people may assume it is the same as IRS.  I believe that FTB law of 14 day limitation is not a mirror of Governor

    Schwarzenegger mind. It violates the AB 183
     
    If you visit this web site on 03/26/2010 you can see no info about 14 days limit law of FTB.
     
    http://california.realestaterama.com/2010/03/26/governor-schwarzenegger-signs-10000-homebuyer-tax-credit-legislation-ID0583.html

    FTB 14 days annoucement
    http://www.ftb.ca.gov/individuals/new_home_credit.shtml?WT.mc_id=HP_Feature_HomeCredit_Hed

    Comment by lichmc | January 22, 2011 | Reply

  8. I just read the AB 183, it realy says about “within two weeks”. But it is still ridiculous bill. A first-come, first-served basis, but the limit in a short two weeks deactive its fairness. it looks like you have the right to speech but you cannot critizie the government.

    Comment by lichmc | January 22, 2011 | Reply

  9. The funny thing is that they allow “Reserving a New Home Credit Before Escrow Closes” and
    then FTB cry out :”….. As shown in the numbers below, we have received New Home Credit reservation requests and applications claiming more than $100 million. Since many of these are duplicate, invalid, revised, for purchases that have been cancelled, or include both a reservation request and application for the same property,…….The numbers are overstated as there are duplicate, revised, and invalid applications included. In addition, some purchases may be included twice if we have received both a reservation request and an application for the purchase. These …… Applications must be faxed …. Due to the high volume of faxes we are receiving,…. ”

    What a waste of time and money for taxpayers!

    Why they do not learn the simple from IRS or limit the work load as:

    “Accepting only application that the selling/buying is done completly such as Settlement Statement (HUD-1), read Instructions for Form 5405 from IRS. If they want to limit due to budget limit, then a first-come, first-served basis and the first 10,000 ($100,000,000/$10,000) application based on closing escrow date.

    Comment by lichmc | January 24, 2011 | Reply


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: