Update on Tax Credits

The Federal tax credits for first time and existing buyers are expiring at the end of April 2010, but the State of California is stepping in with credits for first time buyers that will be in effect for buyers who purchase between May 1st and December 31st 2010. 

These state credits are equal to 5 percent of the purchase price or $10,000, whichever is less. It must be claimed in equal amounts over three years, beginning with the year of purchase.  To get the new credit, first-time buyers can purchase a new or existing home. A first-time buyer is defined as an individual, or an individual's spouse, who had no ownership interest in a principal residence for three years before the date of purchase.

People who are not first-time buyers can get the credit if they buy a newly built home, but not an existing one.  In both cases, the home must be a single-family residence, attached or unattached, and be used as the buyer's principal residence for at least two years.

Kathleen Pender, business writer for the San Francisco Chronicle give an excellent breakdown of how the credit program works.