Governor Schwarzenegger announced on January 7th that he would like to extend the $10,000 homebuyer tax credit to Californians as part of a job stimulation strategy.
Unlike the last $10,000 California Tax Credit, this time around it will be available for the purchase of new construction or existing homes. This is GREAT news for California Homebuyers.
The Governor’s proposal is also asking lawmakers to double the funding of the last credit to $200 million dollars, which will potentially help over 20,000 new California homebuyers.
Home buyers closing escrow before April 20th, 2010 may qualify for BOTH the $8,000 Federal Tax Credit and the $10,000 California Tax Credit.
Qualifying guidelines are expected to be the same as the last time around with no income limits and you must purchase a primary home and live in it for 3 consecutive years at which point the tax credit is not required to be paid back.
Don’t Get the Two Confused
There are drastic differences between the $8,000 Federal Homebuyer Tax Credit and the $10,000 California Homebuyer Tax Credit.
The biggest difference is the way that you receive the tax credit.
If you qualify for the $8,000 Federal Homebuyer Tax Credit you will receive a Check from the IRS in the amount that you qualify for.
If you qualify for the $10,000 California Homebuyer Tax Credit you will receive up to a $3,333 tax credit towards any State income tax you may owe for the next 3 years. There is no check, no money sent to you directly.
What you will be able to do is avoid be exempt from paying California State income taxes if you owe less than $3,3333 in each of the next 3 years.
Making an adjustment to your W4 withholding statement would allow you to bring home more of your paycheck each week (consult your CPA or Accountant for information about this) OR, you can get a big fat refund from the State for the next 3 years.
Personally, I would adjust your paycheck and take home more…..Because with California’s budget problems of late, you wouldn’t want to get an IOU like taxpayers did last year!
Now, there is a lot of opposition to this being whispered in the background because of our State budget problems and falling tax revenues due to dropping property values and skyrocketing unemployment.
Keep your fingers crossed and let’s just see where this goes.
As always, I’ll keep a close eye on this and let you know when there is news.
Other articles about this topic that might interest you:
- Governor Holds Press Conference to Highlight $10,000 Homebuyer Tax Credit Fresno, CA January 14th, 2009 – Making the Case for Stimulating California’s Housing Market If you’re like me and don’t...
- Governor Talks up $10,000 Homebuyer Tax Credit in Bakersfield – Tuesday, February 16th 2010 Governor Schwarzenegger’s Tuesday speech in Bakersfield, CA focuses on his proposed $10,000 Homebuyer Tax Credit Well, he’s hitting the road...
Chris "Doc" Apodaca
Jeff Brown – BawldGuy
Scott Schang
{ 5 comments… read them below or add one }
Wait isnt California in a financial crisis, yet we are giving away FREE money to anyone who buys a home? This wont create an artificail buble will it? What happens when the state and federal money dries up, will demand dry up as well ? Then will prices fall again? If so will you be able to sell your new home that you got all the free money for the same price? Dont think so.
You make some very good points Ken. Your concerns are the concerns of those that oppose this from being enacted. I share many of your views about the affect that this money will have on housing as well as what will happen when it’s gone.
Unfortunately, we normal, rational folk do not possess the lobbying power that big money, corporate America employs in the money grab to artificially manipulate this housing market.
In some ways, it’s a sad state of affairs. In another light however, the temporary fluctuation of home prices should not be a concern. A home is shelter for your family, a tax break as a homeowner, and a long term investment as an asset. New homeowners, although they may find themselves temporarily in a negative equity position, will most certainly see long term gains if they purchased in the past year or so.
That being said, there is a great advantage to homeownership regardless of how bumpy the road may seem at this time, it’s a heck of a lot smoother than it’s been in the past.
Thank you for voicing your opinion here. It is valid and valuable. I think more people should speak out against some of the questionable policy of our government.
Are there any Homebuyer Tax Credit if you purchased a second home in 2009?
Charlotte,
Thank you so much for sharing your story. I am sorry to hear that you have been through this process and that you have had the results you have had.
Can I be completely frank and honest with you? You need to FIRE your real estate agent. While reading through your story there are so many red flags here that your agent did not have a clue about how to keep you informed and educated about the process you were going through. This is a gut wrenching story and I assure you it is not the norm out there.
I know of some very good agents in your area that might be able to give you a second opinion about your options.
Thank you so much for sharing, I think this is a great testament to how important it is to build a good team to help you buy your home and what the consequences are of being too “shy” to fire them when they do a bad job.
If you would like to further discuss why this all went horribly wrong, feel free to call me on my cell 714-336-8286 or shoot me an email directly at Scotts@broadviewmortgagecorp.com – I would like to help you regain a sense of control over the process because I see that you have been misled as to the process and your options up to this point.
Scott
Hi Mary,
There is a very specific definition of a “second home” in regards to qualifying for the tax credit. A “second home” in underwriting and lending terms is a vacation home that you will spend a significant amount of time in during the year and that is located a minimum of 50 miles from your primary residence AND is located in what would be reasonably considered a “vacation” areal – say, Palm Springs for example.
If you simply purchased a NEW primary residence and you retained your old primary residence, then Yes, you may be eligible if you meet the income requirements and have lived in the previous home for 5 consecutive years within the past 8 years.
Let me know if you still need clarification – hope that answers your question