Money running out fast on $10,000 California New Construction Home Tax Credit

Most people do not realize that the new $10,000 tax credit approved by the State of California for the purchase of a newly constructed home is limited to the first $100,000,000 claimed. As of June 3, 2009 $ 82,548,424 in applications for the credit had been received by the Franchise Tax Board, and approx. $10,000,000 in credits per month have been coming in. The following is a link to the Franchise Tax Board with a running total of tax credit applications approved.: Click Here

California allows qualified new home buyers a total tax credit equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.

How to apply

• Within one week (seven calendar days) after the close of escrow:
  • The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person.
  • The buyer will complete Parts II & III of Form 3528-A.
  • The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer.
• Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
• Fax only one completed application per residence with all qualified buyers listed. Do not include information on nonqualified buyers. An incomplete application may delay or prevent credit allocation.
• Do not fax the application to FTB before escrow closes.
• Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible.
• Escrow companies should only send one application per fax transmission.
• The buyer keeps a copy of the completed Form 3528-A for their records.
• The Form 3528-A is now available online as a fillable form. Simply fill in all required information, print the form, and sign. If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.

Application processing

• The buyer will receive notification of credit allocation from us.
• An allocation of credit will not be issued if:
  • The home has been previously occupied.
  • The application is not received within one week after the close of escrow.
  • The application is received after the total credits available ($100,000,000) have been allocated.

Given the rate that the credit has been granted, it appears that homes will need to be closed by September.2009.

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