Tax Credit for New Home Purchase



Information directly from the California Franchise Board

In addition to the updated items identified on this page, we have updated Form 3528-A and the instructions for line 6 and Part III. If you have already faxed a completed application, you DO NOT need to resubmit a new application. We will update this information frequently. Please check this page often.

This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. We will accept applications for allocation of credit by fax only (916.845.9754), starting March 1, 2009; however, we will not send notifications of credit allocation until we have developed procedures. Once we begin processing allocation applications, credits will be allocated on a first-come, first-served basis.

We will update this page as soon as we begin mailing credit allocation letters. We plan to begin mailing credit allocation letters no later than May 1, 2009. This delay is necessary to allow us time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. Please be patient with us and do not send applications more than one time. Tax credit amounts California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available.

Please check this page for updates on the allocated and remaining credits available. Total credit allocated: $0          Remaining credit available: $100,000,000

The remaining credit amount displayed above only reflects allocations processed. This amount will be updated once we begin mailing credit allocation letters, which is expected to commence by May 1, 2009. This amount does not include applications that have been received, but not yet processed.

Applications for New Home Credit received, but not yet processed as of 3/25/09

As of Applications received: Credit claimed:
3/4/09            173     $1,715,826
3/11/09          711     $6,987,515  
3/18/09      1,188    $11,599,825
3/25/09     1,710    $16,647,498

This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. We will update the amount received, but not yet processed, on this webpage each Friday.

As we approach the $100,000,000 limitation, we will update the reported amounts on a daily basis. Keep in mind, that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.

California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.

How to apply Within one week (seven calendar days) after the close of escrow:
The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person. The buyer will complete Parts II & III of Form 3528-A.

The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer. Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.

Fax only one completed application per residence with all qualified buyers listed. Do not include information on nonqualified buyers. An incomplete application may delay or prevent credit allocation. Do not fax the application to FTB before escrow closes. Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible. Escrow companies should only send one application per fax transmission. The buyer keeps a copy of the completed Form 3528-A for their records. The Form 3528-A is now available online as a fillable form. Simply fill in all required information, print the form, and sign.

If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.

Application processing
The buyer will receive notification of credit allocation from us. An allocation of credit will not be issued if:
The home has been previously occupied.
The application is not received within one week after the close of escrow.
The application is received after the total credits available ($100,000,000) have been allocated.

Requirements of the credit
The home must be a “qualified principal residence” as defined under California Revenue and Taxation Code Section 17059(b)(1).

The home must:

  • Be a single-family residence, whether detached or attached.
  • Never have been previously occupied.
  • Be occupied by the taxpayer for a minimum of two years.
  • Be eligible for the property tax homeowner’s exemption under California Revenue and Taxation Code Section 218.

For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)

Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.

FTB may request documentation to ensure buyers have complied with the requirements of the credit. Claiming the credit The buyer must receive an allocation of credit from us to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year. The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.

The buyer must claim the credit on an original timely filed return, including returns filed on an extension. Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal.

For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter. If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year. The credit is not refundable.

Definitions Purchase date:
The date escrow closes.
Qualified buyer: A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowner’s exemption under California Revenue and Taxation Code Section 218.

Qualified Principal Residence/New Home:
A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowner’s exemption.

Types of residence:
Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property:

  • a single family residence
  • a condominium
  • a unit in a cooperative project
  • a houseboat
  • a manufactured home
  • or a mobile home.

Owner-built property:
A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been “purchased.”

Contact us Phone: 888.792.4900 (press 5) 916.845.4900 (not toll-free)

Email:   This is not a secure email address.

Please do not send confidential information.


Althea Garner
Executive Real Estate
House Of Homes Online
DRE 01516817
(714) 264-3458

Search over 50,000 listings at my web site:

Women’s Council of REALTORS(R):
Treasurer – 2008 (Coastal-West)
Webmaster – 2009 (Long Beach)
Editor – 2009 (Long Beach)
Education Committee – 2009 (California State)

Orange County Association of REALTORS(R):
Education Vice Chair – 2009

Flip Properties- Use Our Cash To Flip Properties in Nationwide – Earn Thousands Per Deal

Well,  that was the Blog heading that was posted by someone else but on reading further, I encountered the words ‘easy’ with regard to obtaining a mortage and 2.5% commission to the lender, etc etc etc.

Let’s be honest…..  this is NOT the market to be flipping properties.  I mean, GET REAL!  The banks are clamping down on loans and the property market has dropped,  so where, in all reality, is the profit to come from?

Yes,  you can put lipstick on the pig, but buyers are not stupid – they can see when a property has been rehabbed in a hurry, just to turn a fast buck.

I attended a seminar by a leading investment speaker about 5 years ago, and he advised his students to (and he has been teaching this for about 20 years)!:

1)  Go to an open house and get a look at the guest registry.  Contact the people in the registry, telling them that you are selling the house (then put in an Offer – the idea is to sell the house to one of the ‘lookers’ and close before a mortgage is raised, excluding the REALTOR (R) from the deal).

2)  Go to Home Depot (or equivalent) and buy all the ‘seconds’ paint in one color (ie, all white seconds) and mix it all together in a 40 gallon trash can. What would emerge, would be ONE color – white!  Now this is a good idea, but not used in the way prescribed. Offer to paint the house for the seller, at no charge (read: blood money).

3)  Tell the seller that you have a buyer and offer to plant some flowering plants in the front yard, thereby creating ‘curb appeal’ (During all this time, I can assure you that the listing agent would be asking some questions!

4)  Invite all the ‘lookers’ from the guest registry to the house to arrive at the same time, in order to create a frenzy and have one buyer bidding against the other which would ultimately push the price of the house UP!

Problem #1: The person bringing the buyers is NOT a licensed REALTOR (R)

Problem #2: Think the seller wouldn’t smell a rat?

Problem #3:  Have you ever tried to get information from a REALTORs (R) guest registry?  Best kept secret!

Problem #4:  The likelihood of anyone getting a purchase to close on the exact day that the sale occurs is minimal, to say the least, so interest WOULD be raised and one would be responsible to pay that interest! When that property is flipped,  if the purchase and sale did not go through simulataneously, the IRS would be after their Capital Gains unless you chose to exercise the $250,000 per person tax-free benefit (once every second year), but you’d be nailed on the next flip!

Problem #5: Probably the most important of all – if it could be proven that the buyer came from the guest registry, FULL commission would have to be paid to the agent by the bogus selling agent (or owner, if the purchase/sale went through on the same day), because they would be sued for ‘probable cause’. This commission would be over and above that paid to the agent from the transaction.

Bottom line is that there is no easy way.  One may buy property at a discount but there are risks.  One may obtain a loan through a discount lender, but there are risks (and we have seen the result of discount loans, haven’t we?).  One can buy and sell without a REALTOR (R), but there are risks.

If it seems easy, or rapidly profitable,  there’s usually a catch. Don’t get caught! 

Don’t ever under-estimate the buyer…  even a first-time-home-buyer!  They are simply new at this – not BLIND or stupid! What an insult for them to be treated this way!

The purpose of flipping homes, is to buy at a low price, rehab the property and sell soon after, at a higher price, thereby recouping all costs with an additional bonus profit.  What is the point of buying low, adding rehab costs, labor costs and interest and then selling LOW, which is what is happening in this market?  Anyone who talks you into this scheme, is talking you straight into a LOSS!

 I was chatting to a colleague of mine the other day who was really fired up about purchasing a property (at a discounted price – whatever that might be). He said that as he was in the construction business, he could rehab the property at a low cost and was just looking for ‘investors’. Yeah, right!  I tried to explain to him that his time in rehabbing the place was worth something and although he wasn’t ‘charging’ for his labor, in essence, the profit on the deal would be ‘blood money’. Needless to say, I gracefully declined his generous offer.

So let’s discuss the home flipping reality shows on TV.  These really make me laugh when I do the math, but I get really angry at the message that the show puts out.  On one hand, the math doesn’t add up because the show only gives you SOME costs – not all (for example,  they don’t factor in the closing costs or the agents commission. the agent, I believe does not charge a commission because of the air time they get – I could be wrong but agents commission is not something that is in the costs)!  On the other hand, I really feel for those who go out and try to do this themselves only to find that because the math can’t add up (there are hidden fees that the show doesn’t disclose), the buyers find themselves grossly out of pocket!

But the show is entertaining and they sell advertising based on the popularity of the show. Never mind all those people who lose their shirts finding out that things are not what they appear on TV!  After all,  that is Hollywood and life is quite different.

Some of the things that one has to consider when buying ‘discount’ property is perhaps a neighbor who has a water leak and the water is seeping into your property. This may not be apparent at the time that you buy, however, your foundations are being undermined and slippage can occur, causing not only cracks but, a pulling apart of the house – front from back etc.  Such would be the case of the homes that we have seen on TV where the sub-flooring had to be lifted, due to damp conditions. They make it seem so simple, but this issue can have far-reaching effects.  To repair this type of defect, can range from $20,000 – $100,000!

With that damp, almost certainly comes a mold issue, which requires an expert for abatement and then an inspector to give clearance. These services are not free – in fact they are quite costsly.

A friend of  mine recently expressed concern that her home might have been built on the burial ground of cows, which during the 1920’s had to be ‘covered over’ because they had hoof and mouth disease.  As these cows decompose, they give rise to sink holes, into which homes subside.  I am told that hoof and mouth disease never goes away (don’t hold me to this as I am not a vet), but one wonders what would happen, if the house sunk, exposing the diseased corpses.

I guess this is why one might want to employ the services of a REALTOR (R) who might have knowledge of these things or at the very least, could investigate for the buyer. Realistically, if one were flipping a property and it sunk because it was on a cattle burial ground (as an example), there is no limit to the time span one could get sued – 10 days or ten years! It could still come back on you, even if you were the seller, three times ago. Does that make sense?

These are the things they DON’T tell you on the TV reality shows!

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Althea Garner
Executive Real Estate
House Of Homes Online

The Property Market and Election Day!

Well,  here I sit at Kansas City airport, awaiting my connecting flight to Orlando for the Women’s Council of Realtors National conference.  It’s been a long day of travel – was up at 5.30am, so I could be at the polling station to vote before getting to the airport in Los Angeles by 8.30am!

The election has been on my mind all day as I can’t pick up regular news reports on travel day.  Among those thoughts are: HOW WILL THE ELECTIONS AFFECT THE PROPERTY MARKET?

Now I don’t have a crystal ball and I am no more claivoyant than the next person, but something in my bones tells me that we will see a slight increase in sales once the results come out.  Realistically, no matter who you voted for, some people will feel victorious while others will be ticked that their candidate didn’t get elected.  Those whose candidate was elected will feel a surge of promise and hope and – if they are in the market to buy property – they will accept that now is a good time to buy!

For those whose candidate was defeated: perhaps they will decide not to buy, but, they were sitting on the fence anyway. In other words, they hadn’t bought and now won’t – situation unchanged.

It’s six of one and half a dozen of the other, really – those who were going to buy, will and those who were undecided, won’t!  In both cases,  the election results will simply provide the justification to act in whichever direction they are going.

Whoever moves into the Oval Office, MUST see that something MUST be done about our economy. Clearly, we can’t keep spending money that we (the US) doesn’t have.  Since being in this country (15 years, now) I have seen the government encourage consumer spending and the banks encourage the use of credit.  Hey!  Banks have even issued credit cards to students with little or no credit rating!

So now that the US consumer is accustomed to living off plastic,  the banks have run out of money and the consumers can’t repay their loans because the interest rates were so high and we have reached an empasse!

Will the incoming administration realize that there are too many banks?  That interest rates have brought the life blood of this country (the consumers) to its knees?

My fervent wish is that whoever is successful in winning the Presidential race, will be less inclined to leap back into war, and more able to count to ten and add 2 + 2.  What our country needs most at this time is a leader who has a basic understanding of bookkeeping and can see and understand that you can’t keep spending money that you don’t have!

If I were able to advise our new leader,  I would suggest that ALL interest on credit card debt be eliminated for one year so that consumer payments could be applied to principle.  Let’s face it:  banks have made a mint out of credit card users.  Now is the time to be realistic and objective – if the consumers have had to pull in their belts, then why not the banks, too?

Cash has to start flowing somewhere and better for it to start flowing from where it has bottlenecked – the government and the banks.


Althea Garner

Executive Real Estate

House Of Homes Online