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As the nation undergoes dramatic financial changes California has introduced a new tax incentive to try to increase home sales and help stimulate the state’s economy. This hefty $10,000 tax credit has been designed to help get many of the empty new construction homes off the market and get more money circulating through the state in a short period of time.

This credit, coupled with the historically low interest rates and the high numbers of new construction homes on the market makes the dream of home ownership a reality for those that have yet to purchase their dream home.

At first glance this $10,000 tax credit appears to be very straight-forward but a further look at the Franchise Tax Board website details out the program and is a MUST READ before actually expecting to receive this tax credit.

First, did you know that the government has allotted $100,000,000 for this program BUT it is offered on a “first come, first served” basis? That’s right, this credit is not a sure thing! You first need to actually CLOSE an escrow and then you have only ONE WEEK in which to file your paperwork in accordance with the rules on the FTB website to qualify. The actual amount of your credit is, as stated “a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less”…and taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased so it is not a $10,000 credit for one year’s taxes.

Don’t get me wrong, this is a great offer…where else can you get FREE money for buying a home? What I do recommend is that you consult with a licensed Realtor to assist you with your entire home purchase experience to ensure you have done everything correctly to receive your tax credits.

Visit the Franchise Tax Board Tax Credit webpage for actual details and application information to make sure you will qualify before counting on this great credit!

Here is the current state of the tax credit allocation since implementation:

Applications for New Home Credit received, but not yet processed as of 3/4/09
Number of applications received : 173
Credit claimed on applications: $1,715,826

Written by Clint and Mindy Cronic at Real Estate Professionals GMAC in Redding (530) 227-0345, www.sellingredding.com or www.reddingblogs.com/reddingrealestate

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