If you want to take advantage of the California homebuyer tax credit then you will need to move quickly because the money is almost depleted.
As of last week over 15,000 applicants had applied for $78 million in credits which is almost 80 percent of the allocated $100 million set aside for the states homebuyers tax credit. The program has been in effect for only six weeks.
Based on weekly averages there are about 3,000 applicants per week and at this rate the $100 million may only last until July 1st.
There is the possibility that there may be some confusion once the money is allocated because many applicants, in a rush to beat the end of the money, may have sent in more than one application in an effort to ensure that they get the credit. Still other applicants may have not completed the forms accurately which could also add to the confusion.
In order to qualify a buyer must close escrow between May 1st of this year and January 1st 2011 and may not have owned a principal residence for at least three years. The tax credits are given on a first-come, first-served basis to those who have closed escrow between those two dates.
There is also a second $100 million program which is available to both first-time and move-up buyers who purchase a newly built home as a principal residence. In order to qualify the buyers must sign a purchase contract and then they will be able redeem the credit upon close of escrow which must be done before August 1st 2011. According to the California Franchise tax board about 3,700 applications for a total of $12.8 million out of the $100 million have already been received.
Both programs have a maximum credit of $10,000 or 5 percent of the purchase price, whichever is less. On average, the typical credit applicant usually qualifies for a little over $5,500 in credits.