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| New CA Credit for Homebuyers
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New Opportunities
for Homebuyers, Again!
CA Tax Credit is now Available
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April 7, 2010
In addition to the extended and expanded, the Federal Home Buyers’ Credit, extended to binding sales contracts signed by April 30, 2010 (escrow closing by June 30, 2010) to qualify for the credit. Effective April 7, 2010, California now offers a credit to the lesser of 5% of the purchase price or $10,000 Home Buyers’ Credit for purchases (enter into contract or escrow closing) on or before May 1, 2010 through December 31, 2010 (escrow closing prior to August 1, 2010), or until funding runs out.
The new Act requires that the credit is claimed in equal amounts over three (3) taxable years, beginning with the taxable year in which the purchase of the residence is made. An individual taxpayer is allowed one credit for the purchase of one qualified principal residence. The buyer must occupy the qualified residence for at least two (2) years immediately following the purchase, or the credit is cancelled and tax will be due.
Although the credit is for the lesser of 5% of the purchase price or $10,000, buyers beware! Your credit could be substantially reduced due to the total amount available. Currently there is only $200 million allocated for the purpose of this credit; $100 million for purchases of qualified principal residences that have never been occupied (for any buyer), and $100 million for purchases of first-time homebuyers. This act requires that for each certification or reservation received from a taxpayer, for the purchase of a qualified principal residence that has never been occupied or for a first-time homebuyer, the total amount of credit available for allocation is reduced by an amount equal to 70 percent and 57 percent, respectively.
For example, under this act the 70 percent rate is applied as follows: a taxpayer that purchased a home that has never been occupied could be allocated a $10,000 credit, but the total amount of credits available for allocation is reduced by 70 percent of the credit allocated, or $7,000.
There are other rules and guidelines set forth by the Franchise Tax Board. For more information about this special California State Income Tax Credit, please contact this office of visit the Franchise Tax Board website: www.ftb.ca.gov.
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The new CA Mortgage Forgiveness Debt Relief Modification and Extension Act
Help has arrived!
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April 9, 2010
The Federal “Mortgage Forgiveness Debt Relief Act of 2007,” was enacted to provide relief to families hit by the subprime mortgage market. Normally forgiveness of debt results in taxable income. But, due to this Act, there are several provisions of the Federal Tax Code that allow individuals to exclude debt income relief and thereby avoid taxes on the forgiven income. Up until now, California's provisions to exclusions of this type expired 12/31/2008.
Now, Californians who lose their homes to foreclosures and short sales would not be hammered with a bill for state taxes on the “forgiven” debt under a bill approved by the Legislature Thursday and signed by Gov. Arnold Schwarzenegger on Friday, April 9, 2010.
SB 401, authored by Sen. Lois Wolk, D-Davis, whose district includes some of the most distressed real estate in the nation, exempts borrowers who lost homes last year from state taxes. This bill would allow a taxpayer that had all or part of the loan balance on their principal residence forgiven by their lender in 2007, 2008, 2009, 2010, 2011, or 2012 to exclude up to a maximum of $2,000,000 from gross income and it is retroactive to Janaury 1, 2009. It is estimated that about 100,000 homeowners will benefit from this new bill.
For more information on this timely relief for Taxpayers, please contact this office or visit the Franchise Tax Board website at www.ftb.ca.gov.
Request an appointment or more information
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Expecting a tax refund, and wondering where it is?
Just click on any of the following website links and you will be connected directly to the taxing authorities:
- Click Here to check on your Federal Tax Return Refund and complete the information indiacted.
- Click Here to check on your State Tax Return Refund and complete the information indicated.
- Click Here for more information on your Taxpayer Rights. This IRS website link could be very useful.
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| We accept Discover, Visa, and MasterCard
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At no additional cost to you, for tax prepration fees, we now accept Discover, Visa, and MasterCard. It's fast and easy.
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Nadine M Lord
Enrolled Agent
Certified Financial Planner™
Income Tax Preparation and Representation
30021 Tomas, Suite 300, Rancho Santa Margarita CA 92688
Phone: 949-766-7808 Toll Free: 800-350-1299
Fax: 949-766-7809
Mountain Communities (by appointment only)
24551 Great View Drive, Crestline CA
909-338-7180
email: Nadine.Lord@natplan.com
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