Golden State homebuyers hit tax credit mother lode

California offers first-time homebuyers a $10,000 tax credit on top of a similar, but more liberal federal first-time homebuyer tax credit of $8,000. It's like the mother lode of tax credits for first-timers in the Golden State.

Irony: IRS hand-holding helps homeowners pay fewer taxes

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Fast-moving first-time homebuyers in California can come up with as much as an $18,000 tax credit for buying a home this year.

"Fast-moving" is the operative word.

Along with a federal tax credit of up to $8,000 for qualifying homebuyers (for both new and resale homes), qualified homebuyers in the Golden State can pad their tax savings with an additional $10,000 credit if they buy a newly-built California home.

Legislators packed California's newly approved budget with the last minute, small windfall for qualifying home buyers.

Here's the deal.

• You must purchase your new home as a primary residence between March 1, 2009 and March 1, 2010.

• Your tax credit is the lesser of 5 percent of the purchase price or $10,000 on a new single-family home or condo built in California. Resale homes are not eligible.

• You don't get the tax all at once. The state will take $3,333 off your state taxes beginning the year of the purchase and for the next two years.

• You'll have to stay put for two years or more or you'll loose the credit.

• You'll have to move fast. The funding for the tax break is limited to $100 million dollars. For example, at $10,000 per tax payer, the funds would be depleted after 10,000 taxpayers qualified. First come, first served.

Again, move fast. You must complete the required tax break application within just one week after the close of escrow.

By March 18, 2009, California's Franchise Tax Board (FTB) had already received nearly 1,200 applications for the tax credit amounting to what could be $11.6 million in tax breaks.

For more details, including the application procedure, talk to your tax professional and visit California's FTB online or call 1-888-792-4900.

• Get more less taxing breaking news that really hits home from the DeadlineNews Group.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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Irony: IRS hand-holding helps homeowners pay fewer taxes

We've gone offbeat!
Quick! Click my head!

OMG! The Internal Revenue Service is reaching out to tell you how to pay fewer taxes through a new home buyer tax credit that you can get a lot faster than you might think. It's the brave new world of economic stimulus.

Golden State homebuyers hit tax credit mother lode

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The federal agency charged with collecting dues in Club America -- the Internal Revenue Service -- is advising first-time homeowners how to cash in on a new $8,000 tax credit that could also amount to a sizable refund.

Among other provisions available in the American Recovery and Reinvestment Act of 2009 (ARRA), qualifying taxpayers -- first time home buyers -- who purchase a new or resale home this year can receive up to $8,000 (singles, married filing jointly), or $4,000 (married individuals filing separately).

But first-timers don't have to wait until they file their 2009 tax returns next year. People can claim the credit much sooner and keep much needed cash in their purses.

A tax credit, by the way, reduces your tax due on a dollar-for-dollar basis. If you owe $10,000 in taxes one year and get an $8,000 tax credit, your tax due bill is only $2,000. If you don't own any taxes, the tax credit can come to you as a tax refund.

The IRS has taken on the role of tax saving advocate because ARRA's provisions are designed to stimulate the economy -- especially the housing component, which is considered an economic cornerstone. Putting more money in the hands of consumers, faster, gives them quick spending power. Consumer spending is the real force that fuels the economy and more spending ultimately means more jobs, more workers and, inevitably, more incomes to tax.

It sounds like a dirty job, but the IRS would be remiss not to do it.

"The new credit can get money in the pockets of first-time homebuyers quickly," said IRS Commissioner Doug Shulman in the federal tax agency's prepared statement.

"For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit -- even if they’ve already filed their tax return," he added.

Here are the options.

• Get a filing extension. If you haven't filed your 2008 return, but plan to buy a home, you can request a six-month extension to October 15. File then and you'll get the credit faster than waiting until next year to file your 2009 tax return. File the extension electronically and the refund could be in your hands in 10 days, via direct deposit.
• File now, amend later. If you are already due a hefty refund from your 2008 tax return and plan to buy a home soon, file your tax return on time for your refund due, but claim the credit later with an amended tax return.
• Amend now. If you've already filed your tax return, but plan to buy a home, after the purchase file an amended tax return.
• Wait. It may make sense to wait to claim the homebuyer credit next year on your 2009 return, say if you've got less income in 2009 than in 2008. However, you may want to grab the cash now if you have a good investment vehicle or say, want to make some improvements on your home.

Whatever decision you make, make it with the input of a tax professional to help you sort through the options.

• More details about the evolving tax credit are available on the IRS's "First-Time Homebuyer Credit" page.
• Learn more about ARRA tax benefits.
• For more tax breaks news that really hits home, read "New tax breaks on the house."
• For still more tax shelter news that hits home, visit the "Tax Shelter, On The House" section.

© 2008 DeadlineNews.Com

Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.

Advertise on DeadlineNews.Com

Shop DeadlineNews.Com

Get news that really hits home for your Web site or blog from DeadlineNews.Com.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

---

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Read more!