California Homebuyer’s Credit

California taxpayers who purchase a new home (new construction) March 1, 2009 through February 28, 2010 and use it as their primary residence for the following two years can get a tax credit of 5% of the purchase price (maximum $10,000). 1/3 of the credit is claimed in the year of purchase and each of the two succeeding years. To apply for the credit, the escrow person, on behalf of the seller and buyer, must fax the completed Form 3528-A, Application for New Home Credit, to the FTB , within seven calendar days after the close of escrow. Only the first $100 million of valid credit applications will be approved. (FTB—Tax Credit for New Home Purchase, 02/27/200).

California Budget Tax Changes

HIGHER PERSONAL INCOME TAX RATES: personal income tax rates increased by 0.125% to 0.25% for tax years 2009 through 2012. HIGHER SALES TAX RATES: sales tax rates go up by 1%. San Diego’s 7.75% rate becomes 8.75%. AUTOMOBILE REGISTRATION / VEHICLE LICENSE FEE INCREASE: the vehicle license fee portion of automobile registration, which is a “property tax” on the value of the vehicle, increased from 0.65% to 1.15% for registrations beginning May 19, 2009. NEW HOME BUYER TAX CREDIT: purchase of a new home (new construction) March 1, 2009 through February 28, 2010 used as personal residence for two years results in a tax credit of 5% of the purchase price (maximum $10,000); once $100 million of credits have been claimed, no more credits will be issued.