Taxpayers who qualify for the New Home Credit may, but are not required to, request a reservation prior to the close of escrow.  Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap is reached, as a reservation will “hold the taxpayer’s place in line” until 2 weeks after escrow closes.  Taxpayers may only request a reservation if they have entered into an enforceable contract on or after May 1, 2010.  Taxpayers who only qualify for the First-Time Buyer Credit may not request a reservation.

Requesting or receiving a reservation does not guarantee the credit.  An application must still be completed and faxed to FTB along with the final settlement statement within two weeks after the close of escrow.  If a buyer requests a reservation and the purchase is cancelled, the buyer must notify FTB.   (Updated 04/28/10)

A first-time buyer is any individual (and the individuals spouse/RDP, if married on the date of purchase) who did not have an ownership interest in a principal residence, either in or out of California, during the preceding 3 year period ending on the date of the purchase of the qualified principal residence.

Source: State of California Franchise Tax Board / 2010 Tax Credit for New Home/ First Time Buyer article