Income Tax Credits for California Home Buyers

 Major housewarming gifts worth thousands of dollars are piling up for couples and singles who buy a home in 2009.  Home buyer tax breaks, which surfaced in the 1970s to stimulate buying, are back.

Thursday’s new California budget provides a $10,000 state tax credit to people who buy a new house soon. And the $787 billion stimulus bill signed Tuesday by President Obama gives an $8,000 federal tax credit to first-timers buying new or resale homes. Some home buyers this year can set themselves up for $18,000 off their taxes.

Here are details of the California tax break:

– It applies to new California houses 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 for two following years.
– The owner must live in the new 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’s 10,000 new dwellings.

A legislative analysis of the Ashburn bill said, “It is likely the full $100 million would be reserved before the end of 2009, perhaps in the first few months of availability.”  In other words: first come, first served.

Here are details of the new federal tax break for first-time home buyers that went into effect:

– It’s for new and existing homes purchased between January 1 and December 1, 2009.

– Buyers get a tax break equal to 10% of the purchase price, up to $8,000.

– It does not have to be repaid. 

– Singles must earn less than $75,000 a year. Married couples can qualify with joint annual incomes up to $150,000.

Copyright © 2009, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services.