As of May 1, 2010 First-Time Homebuyers, which includes those who have not owned a home in the past three years, can take advantage of up to $10,000 in California tax credits if they enter into contract between May 1, 2010 and December 31, 2010*.  Here are the the highlights and rules of the bill AB 183:

• The California tax credit is limited to $10,000 or 5% of the purchase price, whichever is less.
• The purchase must be on a principal residence that you intend to occupy and does not qualify for investment properties.
• The principal residence can be either a new home or a resale home
• To be considered a first-time homebuyer, you must not have owned in the previous three years prior to entering into contract or never before.
• The $10,000 tax credit is spread over three years of equal amounts up to $3,333 per year.
• You must occupy your principal residence for the following two years after purchase of the home or the tax credits will be forfeited and recaptured.
• The credit must be reserved with the California Franchise Tax Board  by submitting a signed form during escrow by both buyer and seller that they have entered into contract on or before May 1, 2010 and no later than December 31, 2010.
• Within two weeks after close of escrow, buyer must submit their settlement statement and either a disclosure from the seller saying the home has never been occupied for new homes or the buyer certifying that they are a first-time homebuyer on resale homes.

Should you have any further questions or would like to take advantage of the tax credit for your Orange County real estate  purchase, please feel free to contact  the OC Living Consultants.

* Should be independently discussed with a tax professional