California First Time/New Home Buyer Tax Credit…Beware

Posted on June 7, 2010 | by Denny Oh

If you’re in the market to buy your first home, or if you qualify as a “first time home buyer,” or if you’re buying a “new” home…READ THIS!  If you’re doing one of the above, chances are you’re well aware of the $10,000 California State tax credit – the one that gives you $10K over three years.  However, what you may not know, is that there’s some fine print – you must FILE FOR THE CREDIT IN 14 DAYS upon closing escrow.

Unlike the Federal $8000 tax credit, the California State tax credit must be filed within 14 days of closing escrow and NOT when you normally would file your taxes.  Additionally, those of you who want to take advantage of this must have closed escrow no sooner than May 1st, 2010(but if you’re reading this, I assume you just closed, or are about to close…so keep reading).  The California Tax Credit is only good until the $100 million runs out…so hurry up(same with the New Home Buyer credit…it has a $100 M fund).

In order to qualify for the New Home and/or the First Time Home Buyer Tax Credit, the following must apply:

  • Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
  • Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit(*this only applies to the New Home credit).
  • Be eligible for the California property tax homeowner’s exemption.
  • Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

Again, you must file for either credit within 14 days upon closing escrow.  Buyers are also allowed to send in a tax credit reservation, during escrow if they want to have a better chance of getting some of the State’s money.  Please click here to read the State’s instructions and to make sure you file correctly.  Applicants must fill out Form 3459–A and fax it in to 916.855.5577, along the the buyer’s final HUD-1 statement.

If you have any other questions, please read the FAQ form, contact your realtor, or your accountant.  And if you need help buying or selling a house, please give me a call.

Denny Oh 858–243–2092 [email protected]


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  1. Keahi Pelayo says:

    So if you miss the 14 days, no credit? I wonder how many people will miss it.

  2. Denny Oh says:

    From everything that I’ve read, if you don’t file in the 14 days, or if you wait too long and the credit runs out…your out of luck!

  3. Joel says:

    I’m one of those idiots. I missed the 14 day window. I closed escrow on May 5 and being my first home (a fixer upper) I was so overwhelmed with paper work/moving/remodeling etc. I missed it. I’m so mad at myself, realtor and escrow company. I should have seen this qualification in the 3549-A form “The application and copy of the properly executed settlement statement are not received within two weeks after escrow closes.” But my realtor was basically clueless or didn’t care after getting her money. For some reason, I was under the impression that the Escrow would help me get the seller’s signature like all the other documents. Finally four weeks after phone calls and emails i got “we don’t handle that.” Now, I’m past the 14 days!!! I’m franticly trying to figure out the Federal tax situation… because, I really don’t want to lose this as well.

  4. Denny Oh says:

    Joel – I’m sorry to hear that your agent didn’t help you out. My understanding is that you file for the Federal tax credit when you file your taxes. Make sure you talk to your accountant though.

    Here’s a link that might help you out.

    Good luck and congrats on the new home.

  5. Joel Price says:

    Thanks, Denny! I really only have myself to blame. On the bright side… I’m very happy with our new home.

  6. Denny Oh says:

    It’s a painful lesson, but like you said, now you have a great new home. Enjoy!

  7. gabriel says:

    just started seriously looking to buy a home. is it too late for me/family to receive some of this 100m tax refund? how long does it take to close escrow?

  8. gabriel says:

    when do you think will be too late to close a deal in order to receive the $10000 over a three year period?

  9. Denny Oh says:

    Gabriel – unfortunately, to qualify for the credit, you would have had to have been in escrow before May 1st of this year. Where are you looking to purchase?

  10. gabriel says:

    looking to purchase in city of whittier.

  11. Jen says:

    I was wondering if they count the first day the day after escrow closed or the day that escrowed closed. I faxed my application exactly 14 days AFTER escrowed closed. We closed on June 30 and the application was received July 14.

  12. Denny Oh says:

    Jen – I’m not sure, but at this point, I’m pretty sure the funds have run out. Sorry.