State’s New Home Tax Credit Gone Soon
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Public Affairs Office
For Immediate Release
Still time to apply for the credit
Sacramento – Franchise Tax Board (FTB) announced today that the state’s New Home Credit will soon be gone. As of September 14, FTB has received nearly 16,000 applications and reservation requests. The gross amount of the claims total nearly $103 million. The state has allocated $100 million for this credit.
Because many of the submitted applications are duplicates, FTB plans to accept at least 24,000 applications to ensure that the full $100 million is exhausted.
FTB encourages qualified applicants to send in their applications until it closes the program. FTB will announce the cut-off date on its website at least one week in advance. However, FTB will only issue approved credit certificates until the $100 million is exhausted.
The New Home Credit is available for taxpayers who purchase (close escrow) a new home on or after May 1, 2010, and before August 1, 2011, as long as they enter into an enforceable contract executed before January 1, 2011. The seller must certify that the home has never been previously occupied.
Taxpayers can request a reservation if they are purchasing a new home that is not ready to close escrow in the near future. A reservation does not guarantee the credit, but only holds the taxpayers’ place in line until escrow closes. Those with reservations must still apply for the credit by faxing the required application and documentation within two weeks after closing escrow.
The tax credit is limited to the lesser of five percent of the purchase price or $10,000. The credit can reduce state taxes by up to $3,333 per year for the next three years. There are no income limits, but the tax credit cannot reduce regular tax below tentative minimum tax. The tax credit is nonrefundable and unused credit cannot be carried over.
To apply, the buyer must complete FTB Form 3549-A, Application for New Home / First-Time Buyer Credit, and fax it, along with the final settlement statement, to FTB at 916.855.5577. The application must be sent within two weeks (14 calendar days) after the close of escrow. FTB will allocate the credit on a first-come, first-served basis.
To request a reservation, the buyer must complete FTB Form 3549-RR, Reservation Request for New Home Credit, and fax it along with the purchase agreement, to FTB at 916.855.5577.
Please note FTB stopped accepting applications for the other home-related tax credit, the First-Time Buyer Credit, after August 15.
For more information, go to ftb.ca.gov and select Tax Credits for New Home Purchase / First-Time Buyer, or search for “2010 Home Credit.”
For more information on other taxes and fees in California, visit taxes.ca.gov.