California and the new tax credits

California is offering some nice tax credits for folks who buy either a new home (never been occupied) or a first home. These credits are available for purchases that close escrow on or after May 1, 2010. Here are the rest of the details:

• Applications for the credit must be faxed after escrow closes
• Credits are available for taxpayers who purchase a qualified personal residence only after May 1, 2010 and before January 1, 2011
• Tax credits limited to the lesser of 5% of the purchase price or $10,000, whichever is smaller
• Tax credit received over a 3 year period ($3333 per year) beginning with the tax year the home is purchased.
• Tax credits are non refundable and unused credits cannot be carried over

For both the First Time Home buyer and the New Home Buyer credits, the taxpayer must live in the home for 2 years following the close of escrow.

California has allocated $100 million for the New Home credit and $100,000 for the First Time Buyer credit. Credits allocated on a first come, first served basis. We expect the credits to go fast so if you know of someone who qualifies under the rules, let them know ASAP.