Homebuyer Tax Credit Chart 2010

Member Legal ServicesTel. (213) 739-8282Fax (213) 480-7724April 5, 2010 (revised)

To help stimulate home sales, both the federal and state governments are offering tax credits for Californians purchasingtheir piece of the American dream. Federal law offers up to $8,000 for first-time homebuyers and $6,500 for long-timeresidents. California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never beenoccupied. Here’s a handy summary of the two tax credit laws:

HOMEBUYERTAX CREDIT

FEDERAL

CALIFORNIA

Amount ofTax Credit

10% of purchase price not toexceed $8,000 for First-TimeHomebuyers or $6,500 for Long-Term Residents.5% of purchase price, not to exceed $10,000for first-time homebuyers or buyers ofproperties that have never been occupied.(See also Maximum Credit for All Taxpayers.)

Date ofPurchase

By June 30, 2010, but taxpayermust enter into a written bindingcontract by April 30, 2010.From May 1, 2010 to July 31, 2011, but anenforceable contract must be executed byDecember 31, 2010.

PrincipalResidence

Yes. Property purchased must bethe taxpayer’s principal residencewhich is generally the home thetaxpayer lives in most of the time(26 U.S.C. § 121).Yes. Property purchased must be a qualifiedprincipal residence and eligible for thehomeowner’s exemption from property taxes(Cal. Tax & Rev. Code § 218).

Type ofProperty

House, condominium, townhome,manufactured home, apartmentcooperative, houseboat,housetrailer, or other type ofproperty located in the U.S.Single-family residence, whether detached orattached.

Eligibility

First-Time Homebuyer

: Up to$8,000 if buyer (and buyer’s spouseif any) has not owned a principalresidence during the three-yearperiod before date of purchase; OR 2.

Long-Time Resident

: Up to$6,500 if buyer (and buyer’s spouseif any) has owned and used existinghome as a principal residence for 5of the last 8 years.1.

First-Time Homebuyer

: Up to $10,000 ifthe buyer (and buyer’s spouse if any,according to FTB) has not owned a principalresidence during the three-year period beforedate of purchase; OR2.

Never-Occupied Property

: Up to $10,000for a principal residence if the property hasnever been previously occupied as certifiedby the seller.

IncomeRestriction

Yes. Tax credit begins to phase outfor modified adjusted gross incomeNo1

HOMEBUYERTAX CREDIT

FEDERAL

CALIFORNIA

(MAGI) over $125,000 (or $225,000for joint filers). No tax credit at allfor MAGI over $145,000 (or$245,000 for joint filers).

MaximumPurchasePrice

$800,000. N/A

Refundable

Yes. Any amount of the tax creditnot used to reduce the tax owedmay be added to the taxpayer’s taxrefund check.No

Repayment

No repayment required if the buyerowns and occupies the property forat least 36 months after purchase.No repayment required if the buyer owns andoccupies the property for at least two yearsimmediately following the purchase.

MultipleBuyers(not marriedto each other)

Tax credit may be allocatedbetween eligible taxpayers in anyreasonable manner.Tax credit must be allocated between eligibletaxpayers based on their percentage ofownership.

MaximumCredit for AllTaxpayers

N/A$100 million for first-time homebuyers and$100 million for never-occupied properties,both on a first-come-first-served basis.

Reservationsof Credit

N/AYes. Buyer may reserve credit before close ofescrow for a property that has never beenoccupied by submitting a certification signedby buyer and seller stating they have enteredinto an enforceable contract between May 1,2010 and December 31, 2010, inclusive.

When toClaim

Full tax credit may be claimed on2009 or 2010 tax returns.1/3 of total tax credit may be claimed eachyear for 3 successive years (e.g. $3,333 for2010, $3,333 for 2011, and $3,333 for 2012).

Tax Agency

Internal Revenue Service (IRS). Franchise Tax Board (FTB).

How to File

First-Time Homebuyer Credit andRepayment of the Credit (IRS Form5405) to be filed with tax returnsSubmit application to the FTB to obtainCertificate of Allocation. The FTB mayprescribe additional rules and procedures tocarry out this law.

OtherRestrictions

Cannot be an acquisition fromrelated persons as defined; cannotbe an acquisition by gift orinheritance; and buyer cannot be anon resident alien.Cannot be an acquisition from related personsas defined; buyer or spouse must be 18 yearsold; buyer cannot be another taxpayer’sdependent; credit is allowed for only onequalified principal residence; and creditallowed cannot be a business credit underCal. Tax & Rev. Code § 17039.2.