Legal Question in Tax Law in California

Home Seller Incentives

I am purchasing a home from Pulte Homes and they are offering $18,000 in incentives for the purchase at closing. How do I treat this amount for tax purposes? I know that car companies offer incentives to purchase cars, but have not heard implications to those incentives on an individuals taxes.


Asked on 9/03/07, 11:57 pm

2 Answers from Attorneys
Jeb Burton The Burton Law Firm

Re: Home Seller Incentives

What kind of incentives? Usually these types of "incentives" are for upgrades in the house. If that is the case, you would treat the incentives as part of the home... meaning that, in reality, Pulte is selling you a house for 18,000 dollars cheaper, and allowing you to customize it. Since you are paying for the home, you are not "gaining anything" and hence the extra benefits are not considered taxable.

Most likely, any other kind of incentive would be treated the same way. That being said, this is a "general answer" to a specific question and does not necessarily apply in your specific situation. Your best bet would be to contact a CPA, as most are certainly capable of answering this type of question.

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Answered on 9/04/07, 12:23 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Home Seller Incentives

It depends. Get local legal advice. Avoid using the builder's lender. Have the proposed mortgage terms scrutinized by someone knowledgeable. Insist on your own independent home inspection prior to closing. Do not sign any document containing an arbitration clause. Do not accept EFIS stucco exteriors.

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Answered on 9/04/07, 12:52 am


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