I don’t know if everybody knows that the state of California has extended the first time home buyer and re-beat buyer tax credit. New applications will be available on May 1st, 2010. The federal governments tax credit will expire April 30, 2010. There are a few difference with the State credit and the federal credit.
The state credit will have a budget of $100 million for first time home buyers and $100 million for re-beat buyers. The major difference with a budget, is you can run out of funding and the program ends. They plan to on the $100 million cap for New Home Credit will be reduced by 70% of tax credit allocated to each buyer. The $100 million cap First Time Home Buyer credit will be reduced 57% of the tax credit allocated as well. This is because the state feels that many buyer will not be able to use the whole credit within 3 years. These credit will be served on a first come basis. Another difference is this is a credit. That means it goes against what you owe in your taxes. You have to use this tax over a three year period ($3,333 per year). This tax cannot reduce regular tax below your Tax Minimum Credit (TMT). You cannot get a refund for the amount you do not use.
The taxpayers who are first time home buyers need to purchase (close escrow) on or after May 1, 2010 and before January 1, 2011 in order to get this credit. Repeat buyers going for the New Home Credit need to purchase on or after December 31, 2010 and before August 1, 2011
There are a few regulations on who will be aledgeable for these two credits. Please go to the government website and too read all the rules and updates as they become available. http://www.ftb.ca.gov/individuals/New_home_Credit.shtml