Just as the federal home buyer’s credit is set to expire, Governor Arnold Schwarzenegger signed legislation offering up to a $10,000 tax credit for purchase of a home.

Unlike last year’s legislation, this year’s Homebuyer Tax Credit recently signed into law adds a tax credit for the purchase of an existing home by a first-time homebuyer. Unlike the federal tax credit, the newly enacted state tax credit will be spread over a three-year period.

Some of the most important details of this once-in-a-lifetime opportunity for prospective homebuyers include:

• The New Home/First-Time Buyer Credits are available only for purchases that close escrow on or after May 1.

• The home must be the buyer’s principal residence for at least two years after the date of purchase.

• Applications must be submitted after escrow closes. The new application will be available by May 1. (The FTB will deny the application if the 2009 form is used or if the 2010 application is received by the FTB before May 1, 2010).

It is important to note that there is a limit to the total amount of credits that the state will allow. The previous tax credit reached that limit months before it was set to expire, so those who are eligible to qualify for the credit should be prepared to act quickly. Be sure to consult a realtor and a tax specialist to ensure all of the benefits of the state and federal credits are fully captured. For detailed information regarding the California credits go online to the Franchise Tax Board’s website at ftb.ca.gov.