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Home buyer tax breaks, which surfaced in the 1970s to stimulate buying, are back!
New California budget provides $10,000 state tax credit to people who buy a new house within the next year. In addition, the $787 billion stimulus bill signed by President Obama gives an $8,000 federal tax credit to first-time buyers purchasing new construction or resale homes. Some home buyers have the opportunity to receive $18,000 off their taxes.
Details of the state tax break for new construction houses and condominiums:
· It applies to new construction California homes or condos bought as primary residences between March 1, 2009, and March 1, 2010.
· It’s for 5% of the purchase price or $10,000, whichever is lower.
· The state will take $3,333 off a buyer’s state taxes starting in the year of purchase and continuing for two following years.
· There are no maximum income limitations.
· The owner must live in the new construction home or condo for two years or lose the break.
· Collectively, the state tax break is limited to $100 million. At $10,000 per tax break, that means 10,000 new dwellings.
Details of the new federal tax break for first-time home buyers:
· It’s for new and existing home purchased between April 9, 2008 and July 1, 2009.
· Buyers receive a tax break equal to 10% of the purchase price, up to $8,000.
· It does not have to be repaid. (Last year, buyers received $7,500 tax credit for homes bought between April 9, 2008, and Jan. 1, 2009, but had to repay over 15 years, interest-free).
· Singles must earn less than $75,000 a year. Married couples can qualify with joint annual incomes up to $150,000.
· Can be used as a down payment!
We hope you found this information useful. For further clarification, contact your CPA.
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