Be sure to discuss this recently enacted tax credit with your Deb Howard & Co. buyers agent and your personal tax adviser.
Individuals who purchase a qualified principal residence on or after March 1, 2009, and before March 1, 2010, and live in that home for at least two years are allowed a nonrefundable, noncarryover credit. The credit equals the lesser of $10,000 or 5% of the purchase price. A qualified principal residence is a new or previously unoccupied, single-family (detached or attached) home that qualifies for the homeowners’ property tax exemption. Also, the seller must submit a certification that the home was not previously occupied to both the buyer and the Franchise Tax Board (FTB) within one week of the sale.
Taxpayers must claim the credit equally over three successive taxable years, beginning with the taxable year in which the purchase was made. (SBX2 15; R&TC §17059) The credit is first come, first serve, and there is only $100 million available for all taxpayers. Any disallowed credit will be treated as a mathematical error by the FTB, so the taxpayer will have no protest or appeal rights.
To get the credit:
The seller must complete Part I of Form 3528-A,
Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person;
The buyer will complete Parts II and III of Form 3528-A; and
The escrow person, on behalf of the seller and buyer, will provide a copy to the buyer and fax the completed Form 3528-A to FTB at:
Fax (916) 845-9754
Internal Revenue Service Circular 230 Disclosure: Pursuant to United States Treasury Department Regulations, we are required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
The preceding is not intended as legal advice.