Updated Tax Credit

Cash-starved California just came up with $200 million more to throw at the housing market.

On Thursday, Gov. Arnold Schwarzenegger signed a bill that will award an estimated $200 million in state income tax credits to people who buy a home starting May 1.  The credit is worth up to $10,000, spread evenly over three years.  The credit is available to anyone who buys a newly built home or first-time home buyers who buy a newly built or existing home. To qualify a buyer is one who has had no ownership interest in a principal residence for the three years before the date of purchase.

People who are not first-time buyers can get the credit if they buy a newly built home but not an existing one., it must be a single-family residence, attached or unattached   be used as a buyer’s principal residence for at least two years.

The credit is equal to 5 percent of the purchase price or $10,000, whichever is less.  It must be claimed in equal amounts over three years, beginning with the year of purchase.

Buyers of existing homes must close escrow between May 1 and Dec. 31.

Buyers of new homes can reserve a credit by entering into an enforceable contract between May 1. 31, filing the property paperwork with the tax board and closing escrow by Aug 1, 2011.