CA Tax Credit Program Started

SACRAMENTO, CA - State Housing Officials today announced that buyers of newly constructed homes and first-time home buyers in California can tap into a state tax credit program that will help them save up to $10,000, starting May 1, under a bill signed by Governor Schwarzenegger. Assembly Bill 183, signed by Governor Schwarzenegger in March, extended and expanded the successful Home Buyer Tax Credit Program, making $200 million available to first time home buyers: $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit.

Under the provisions of the bill, a first-time home buyer or a buyer of a new home may receive up to a $10,000 state tax credit for purchases that close on or after May 1, 2010. Tax credits will be given on a first come first served basis, so interested buyers are encouraged to move quickly to take advantage of this unique State incentive.

"It is time to go shopping," stated Real Estate Commissioner Jeff Davi. "Any first-time home buyer or those interested in buying a newly constructed home that is sitting on the fence, I would encourage them to take the leap."

To qualify for a tax credit on a new home purchase, the home must:

Be a single family residence, either detached or attached.

Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit.

Be eligible for the California property tax homeowner's exemption.

Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

In general, to qualify for a first-time buyer tax credit, the home must:

Be a single family residence, either detached or attached.

Be eligible for the California property tax homeowner's exemption.

Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

The home buyer tax credit is a part of the larger California Jobs Initiative that Governor Schwarzenegger proposed in his State of the State address in January to create jobs and stimulate the economy. Governor Schwarzenegger fought hard to extend and expand the home buyer tax credit after its successful run in 2009. That $100 million tax credit, which became available in March 2009, ran out after just four months with 10,659 Californians claiming the credit – increasing home purchases, jumpstarting building projects and boosting local economies.

"Combined with other initiatives by state, local and federal governments as well as the private sector, this home buyer tax credit will play an important role in stabilizing California's housing market," said Steven Spears, Executive Director of CalHFA.

New home construction and sales lead to economic benefits that reach far beyond the housing market. As new home sales increase, the demand for related goods and services, including construction materials and jobs, also increase. In addition, increased home sales of all kind will help reduce the number of vacant homes, make neighborhoods complete, reduce blight and spur demand helping stabilize housing prices for all homeowners.

"We know that small business owners have used mortgage refinancing in the past to create capital flow for their businesses and that it has become more difficult to do so given the recession," said Governor's Office of Economic Development Director, Joel Ayala. "This $10,000 home buyer tax credit is a great way to help buyers of newly constructed homes as well as first-time buyers and provides additional fuel for our economic recovery. Housing has always been a major revenue source for the state."

"Creative solutions that stimulate home purchases are imperative in helping to turn the housing market around and in turn contribute to the economic prosperity of our communities," said Lynn Jacobs, Director, Department of Housing and Community Development.

For more information on the tax credit and application procedures go to the Franchise Tax Board's Web site at: http://www.ftb.ca.gov/individuals/new_home_credit.shtml