Monday, April 05, 2010

Californians get Improved $10,000 Home Buyer Tax Credit

My home state of California recently extended a home buying credit that had expired last year. The bill (AB 183) was signed into law by Governor Arnold Schwarzenegger and is due to take effect on May 1st, 2010. According to this article on The, the law extended the credit to all homebuyers, not just first-time homebuyers.

"I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy, and today I am proud to take action and put it into law," Schwarzenegger said at the legislation's signing ceremony last month.

The new law's $200 million allocation is split 50/50 between eligible first-time home buyers who purchase an existing home and anyone purchasing a new home. First-time buyers are defined as those who have not owned a home in the past three years.

Unfortunately, the immediately obvious flaw in California's home-buying carrot is that it takes effect May 1, the day after the existing and also expanded federal home-buyer tax credit is scheduled to end.

When both the California and federal home buying tax credits were available simultaneously, Californians struck a tax credit motherlode — total tax credits of up to $18,000.

The first $100 million tax credit, approved in February 2009, was only for first-time home buyers who purchased new homes. Funds ran out after just four months, with 10,659 Californians claiming the credit, according to the Franchise Tax Board.

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