Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.
This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).  Buyers also must be at least 18 years old and be unrelated to the seller.  First-time buyers are defined as those who have not owned a home in the past three years.
To learn more about the California Home Buyer Tax Credit, click here.

This Article was provided by CAR. As I am not a tax professional, please confer with your CPA or other tax advisor about how this California tax credit may affect your next home purchase.

You could receive an $6,500 TAX CREDIT if you are CURRENTLY A HOMEOWNER and purchase another owner occupied home between November 7, 2009 and April 30, 2010 that closes escrow by July 1, 2010. You must have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

You could be eligible for an $8,000 TAX CREDIT if you are a FIRST-TIME HOME BUYER and purchase a home between November 7, 2009 and April 30, 2010 that closes escrow by July 1, 2010. You or your spouse must not have owned a home during the three years prior to the purchase.

The purchase price cannot exceed $800,000. Also, single Buyers with incomes that do not exceed $125,000 and married couples with combined incomes up to $225,000 may receive the maximum tax credit. The tax credit will not need to be repaid as long as the home is “owner occupied” for three years or more. If the property is sold during this three-year period, the full amount of the tax credit will be recouped on the sale.