The federal homebuyer tax credits are slated to expire soon. But real estate agents say a window has opened in California for some first-time buyers to snag not one but two tax credits, worth up to $18,000.
The reason is that Gov. Arnold Schwarzenegger recently signed legislation for a new tax credit program that will begin just before the federal credits are scheduled to end.
To take advantage of both credits, the California Association of Realtors says a first-time buyer must sign an agreement to purchase a home by April 30, one of the federal deadlines. The buyer then must close escrow between May 1, when the state program begins, and June 30, when the federal program ends.
The federal credit would provide $8,000 and the state credit would add up to $3,333 a year more for three years. The new state program allows first-time buyers to purchase existing homes, in contrast to a previous state credit that was limited to new homes only.
Existing homeowners also have the same window of time to receive state and federal credits worth up to $16,500. But to receive the state credit, those buyers must purchase a brand new home.
Glen Hurley, manager of Platinum Realty in Santa Rosa, said he is urging a client to try to purchase a home this month before the federal credit goes away.
“To walk away from an extra $8,000 would be foolish,” Hurley said.
Brenda Joet, a spokesman for the state Franchise Tax Board, pointed out that the California credit won’t exceed the amount the buyer owes in state taxes. Thus, she said, a buyer who owes only $500 in state income taxes this year would receive a credit for no more than that amount.
Joet encouraged the public to learn more about the state homebuyer tax credits at the Franchise Tax Board site.
— Robert Digitale