Debra A. Simmons, CPA

New Credits for California Home Purchases

In Income Taxes on March 26, 2010 at 2:33 am

AB 183, a modified version of last year’s New Home Credit, is awaiting the Governor’s signature. The bill provides credits for first-time homebuyers, and taxpayers buying homes that have never been occupied. The Governor is expected to sign the bill.

Taxpayers who purchase a “qualified principal residence” on or after May 1, 2010, and before January 1, 2011, will be allowed a credit equal to the lesser of 5% of the purchase price or $10,000. The credits are also extended to taxpayers who enter into an enforceable contract on or after May 1, 2010, and before January 1, 2011, so long as the sale is completed before August 1, 2011.

Like the prior New Home Credit:

*The taxpayer must apply the credit in equal amounts over three successive taxable years, beginning with the year in which the qualified principal residence is purchased;

*Each credit has a $100 million limit, and will be awarded to taxpayers on a first-come, first-served basis; and

*The credits are not refundable, will not reduce AMT, and cannot be carried over.

For additional information on the effect of this 2010 change on your taxes, please contact me at (310) 701-1825.

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