REALTOR®: California's New Home Buyer Tax Credit
Wednesday, March 31, 2010
California Governor Arnold Schwarzenegger has signed into law new legislation which provides $200 million in new home buyer tax credits. This new credit will begin May 1, a day after the expiration of the federal home buyer tax credit on April 30.
"We are pleased the Governor recognizes the benefits the tax credit will provide for families hoping to buy their first home," said Silicon Valley Association of REALTORS® President Jeff Bell. "We have seen the positive impact the federal home buyer tax credit and last year's state tax credit have had on California's housing market. We hope the new state tax credit will continue to bring stability to our market place."
The California Association of REALTORS® also applauded the new state home buyer tax credit. C.A.R. President Steve Goddard said the new law also will significantly contribute to efforts to stimulate jobs creation within California's housing market by helping to incentivize first-time home buyers to purchase homes that have been abandoned, foreclosed upon, and returned to the lender; or have been sitting on the market for extended periods of time.
"It is these homes that will require substantial rehabilitation by the new owners, which will in turn generate a tremendous increase in jobs and accessory purchases connected to home improvement activities," Goddard said.
California's previous home buyer tax credit program was so successful it ran out of tax credits by the end of June 2009, eight months before it was set to expire.
This year's state home buyer tax credit is distinctly different from last year's credit and the current federal home buyer tax credit. The bill allocates $100 million for qualified first-time home buyers of existing homes and $100 million for any qualified home buyer towards the purchase of new or previously unoccupied homes.
Below are the key provisions of the new state home buyer credit:
• Credit cap is equal to the lesser of 5 percent of the purchase price or $10,000, and is disbursed in equal installments over three consecutive years.
• Purchasers will be required to live in the home as their principal residence for at least two years, or forfeit the credit (i.e., repay it to the state).
• There are two different types of qualifying purchases: single-family residence purchased by a first-time home buyer (taxpayer who has had no ownership interest in a principal residence in the last three years); and new single-family residence (home which has not been previously occupied).
• Credit is for purchases of qualified homes between May 1 and December 31, 2010.
• Allows a taxpayer to reserve a credit prior to the close of escrow for the purchase of a new home if the taxpayer and seller jointly sign and submit to the FTB a certification stating they entered into an enforceable purchase contract on or after May 1, 2010 and on or before December 31, 2010.
• Credit is available on a first-come, first-served basis.
The credit will be administered by the California Franchise Tax Board (FTB), which administered a similar tax credit last year. The administrative rules will be similar, if not identical, to last year's, which most significantly required the seller to file paperwork with the state within seven days of entering into contract with the buyer, in order for the buyer to qualify and reserve a credit. For more information on the new state home buyer tax credit, visit
www.ftb.ca.gov.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.
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