Hi Desert Real Estate Forum

The following are answers to frequently asked questions regarding he state a federal tax credits:

What is the amount of the tax credit?

For Federal credit it is 10% of the purchase price up to a maximum of $8,000

For State credit it is 5% of the purchase price up to a maximum of $10,000

Must the property by the homebuyer’s primary residence?

For both programs the home purchased must be the homebuyer’s primary residence.

The Federal credit requires that the home be occupied for 36 months while the State program requires 24 months of occupancy

What type of property may be purchased?

For both programs, a single family unit, condo, manufactured property will qualify. There are other qualified properties as well.

NOTE: In California, the home purchased must be a newly constructed property.

Are there income restrictions for either program?

For the Federal program, a maximum adjusted income for an individual cannot not exceed $75,000, $150,000 for couples filing jointly. The program begins to phase out at this point and is not available for incomes over $95,000/$170,000.

The California program has no income restrictions.

When must you purchase the home?

For the Federal program, you must close escrow by 30 November 2009. For the State program escrow must be closed by 28 February 2010.

NOTE: The California program has only allotted $1,000,000 and the program will end when that money runs out.

Is the buyer eligible for a tax rebate?

Under the Federal program, any monies not used to reduce the buyers tax owed, may be added to the buyer’s tax refund check.

Under the state program no rebate is authorized.

May the tax credit be used for costs of sale?

Under the Federal program, a buyer purchasing the home using an FHA loan may use the credit to cover closing costs or any down payment amount over the required 3.5%

No such provision is allowed in the State program

If you have any additional questions, or want further information please post on this blog.