If you are considering a new home purchase in California, the following article will be music to your ears. There is a new state tax credit being offered to home buyers in California, which provides up to a $10,000 tax credit for California new home buyers. And so far...It's working! That is, there has been a considerable number of new home sales, and fewer cancellations of new home purchases, that can be directly attributed to this new incentive.
The following story covers greater detail, and was provided by Eve Mitchell. Eve covers real estate and personal finance for the Bay Area News Group. Reach her at 925-952-2690 or emitchell@bayareanewsgroup.com
State legislation was introduced Wednesday that would make it possible for an additional 20,000 taxpayers to take advantage of a popular program that provides new-home buyers with a state income tax credit of up to $10,000.
Assembly Bill 765 calls for increasing the existing $100 million cap for the California new home tax credit program to $300 million.
The state tax credit is for california new homes purchased between March 1, 2009, and Feb. 28, 2010, or as long as program funding is available. Passage of the state budget in February first established the credit and the cap at $100 million, which is enough to provide 10,000 new home buyers with a $10,000 credit.
To date, 5,668 applications have been submitted for the program, resulting $54.9 million in credits being claimed. If AB 765 becomes law and funding for the program is increased to $300 million, it is estimated that about 30,000 taxpayers would benefit from the program.
"When we passed the tax credit in February, we were hoping it would work to stimulate the housing market," said Assemblywoman Anna Caballero, D-Salinas, co-author of the legislation. "We had no idea it would be this successful. In just two months, more than half of the credits are gone."
The legislation would also make it possible for the credit to be reserved at the time a buyer executes a purchase agreement for a new home in California, whether it has already been constructed or needs to be built from the ground up, as opposed to waiting for escrow to close under the current program.
Layne Marceau, president of the Northern California division of Shea Homes, said the credit is working.
Sales of new homes are up and cancellations are down.
"In the next two months, we're going to start 60 homes and that is all attributable to the tax credit," he said.
First-time buyers who take the state credit can also apply for a federal income-tax credit worth up to $8,000 for first-time buyers, which are defined as not owning a home in the previous three years.
The federal credit applies to homes purchased between Jan. 1 and Nov. 30, 2009.
STATE INCOME TAX CREDIT
The state home buyer tax credit is for
new homes in California. It is not restricted to first-time home buyers. The credit is equal to five percent of the home's purchase price, up to a maximum of $10,000. Most buyers qualify for the maximum $10,000 credit, since most new home purchases in California are $200,000 or higher. The credit is paid out to qualified home buyers over a period of three years. For more information, go to www.ftb.ca.gov or call 1-888-792-4900, press 5.
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