Governor Schwarzenegger signed Assembly Bill 183, the Homebuyer Tax Credit legislation, into law today. This is a law that will allow for approximately $200 million for home buyer tax credits,. Of this $200 million, about half will be set aside for first-time home buyers who qualify and purchase existing homes. The other half will be set aside for qualified buyers who purchase new, or previously unoccupied, homes.
Under this program, eligible taxpayers purchasing personal residence and who qualify for the credit must purchase the property between May 1, 2010, and Dec. 31, 2010, unless they purchase the property after Dec. 31, 2010, and before Aug. 1, 2011, but have an enforceable contract executed on or before Dec. 31, 2010, will be the individuals who will be allowed to take the tax credit.
The amount of the credit is equal to the either 5 percent of the purchase price or $10,000 ( taken in equal installments over three consecutive years); whichever is less. Additional requirements in order to be eligible for the credit include the fact that buyers MUST live in the home for at least two years. If this last requirement is not met, the credit will be forfeited, and any portion previously claimed will immediately be due, payable to the state.
Historically, programs such as this one have led to a positive increase in home purchases. Many buyers describe themselves as being more willing to purchase a home when they know they are eligible for a tax credit. A prime example of the impact of credits on the housing market can be seen by the impact the Federal credit has had on the housing market.
Industry professionals are hoping that this state tax credit will result in just the push that the housing market in California needs to stimulate sales, motivate rehabilitation and create employment for construction and contractor-related jobs.
