What’s Going On With The First-Time Home Buyer Tax Credits?

This is an update on the tax credits available to first-time home buyers by the San Mateo Real Estate Blog.

The Federal Tax Credit

First-time home buyers who purchased a home between April 8, 2008 or on/before April 30, 2010 were eligible to apply for the Federal tax credit. You must receive ownership by June 30th, 2010.

You have to live in this home as your primary residence and there are income limits. “The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). Different income limits apply to purchases on or before Nov. 6, 2009 and those after that date.”

The California First-Time Home Buyer Credit

Like the Federal credit you must be purchasing this home as your primary residence. Unlike it though there are no income limits.

You have to buy between May 1, 2010, and before January 1, 2011 – although the $100 million set aside will be long gone by January of next year. The purchase date is the day you receive ownership, not the day you sign the contract.

The tax credits is either 5% of the purchase price or $10,00 – whichever is less.

Get this: Because they’ve received so many applications that are filled out wrong and they don’t have a software program to process them yet they’re going to keep taking them until they get to 28,000 applicants. They estimate as of 6/15/2010 – “based on small samples” – that they’ve gotten 15,220 applications.

“We expect it to take 3-6 months to notify taxpayers after an application or reservation is received. We need to develop a computer system to capture, verify, reserve or allocate, issue letters, and track the credits.” Three to six months after they create the software?

I can’t even imagine the chaos this credit has created. $100 million is just for the credit. What about the software program, the staff, the office equipment – all the “stuff” that’s needed to process these applications?

All this from a state that some are saying is already bankrupt. Did it help the housing market? Was it worth it?

Vicki Moore About Vicki Moore

RE/MAX Star Properties
282 Redwood Shores Parkway
Redwood Shores, CA 94065

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