Two NEW Available Tax Credits

$8,000 Tax Credit For Home Buyers

The $8,000 tax credit for first-time home buyers should entice some first-time home buyers to “jump-in” and buy a home, but it may prove to do little in increasing overall demand as first-time home buyers represent a small percentage of the entire market. Only time will tell if the tax credit is effective.

Available only to first-time home buyers

• The tax credit is not a loan and does not require repayment*
• *If the home is sold within 3-years, the $8,000 tax credit must be re-paid
• The tax credit reduces the home buyer’s tax liability; if the buyer’s liability is less than $8,000, the remaining credit will be issued as a check
• Home purchase must be for a primary residence
• The credit is available on home purchases between January 1, 2009 and December 1, 2009
• If you are single and make $75,000 or more, or are married and make $150,000 or more, you do not qualify for the tax credit
• The credit is not eligible if the seller is a relative of the buyer – Thanks Tina Fountain

Home Energy Credit

• Tax Incentives for Improving Existing Residential Real Estate
• Homeowners can recoup up to 30% of the cost of installing energy saving features in their home
• The credit is valid on up to $1,500 of improvements
• Over $4 billion was allocated for the Home Energy Credit

Examples of improvements: Energy Efficient Windows and Doors, Air Conditioning, Furnaces, Water Heaters. Click here for ideas about having an energy efficient home.

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$10,000 State Tax Credit For California New Home Buyers
Late last week, California lawmakers approved a new budget that cut spending by $13 billion in an effort to reduce the state’s $42 billion deficit. Included in the budget is a provision allocating state funds for a $10,000 tax credit for new home buyers.

The $10,000 tax credit is for home buyers that purchase a new home between March 1, 2009 and March 1, 2010. The bill set aside $100 million for the tax credit, so after 10,000 new homes are purchased, the credit is gone.

Last month, an estimated 29,458 new and resale houses were sold statewide; if you want the incentive, you probably won’t want to wait until next March.

Here are the details about the state tax credit.
1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.

2. The tax credit is for new homes only. The construction of a new home generates more tax revenues than the $10,000 tax credit will cost, so the credit is limited to the purchase of new homes. You will not qualify for the state tax credit if you buy an existing home.

3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.

Examples: (Price of home 5%)

• If you purchase a new home that costs $150,000, your tax credit will be $7,500
• If you purchase a new home that costs $200,000, your tax credit will be $10,000
• If you purchase a new home that costs $450,000, your tax credit will be $10,000

4. Home buyers will receive the tax credit, in equal amounts, over 3-years

Examples: (Tax Credit / 3 years)

• If your tax credit is $7,500, you will receive a tax credit of $2,500 each year for three years.
• If your tax credit is $10,000, you will receive a tax credit of $3,333.33 each year for three years.

5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.

6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.

7. The tax credit only applies if the purchased home is your primary residence.

8. There is no down payment requirement to receive the $10,000 tax credit.

9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.

10. The tax credit is limited to the first 10,000 new home purchases.
Each week I try to send you real estate related information I feel will be helpful. As an Associate Real Estate Broker selling homes in this area for the past 17 years, I bring to the table a lot of knowledge and expertise to help you with your decision making. I sell Re-Sale Homes and New Homes, and I am here to help you in any way I can. Just give Nancy a call. Using “Old Fashioned Service with New Fashioned Technology.”

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Brought to You By Your Favorite Realtor,
Nancy Hankin
www.PalmSpringsHomesAndEstates.com