California Propsed Tax Credit ... For First-Time Homebuyers Only
Gov. Arnold Schwarzenegger’s proposed homebuyer’s tax credit would be available to first-time homebuyers only, a departure from the last tax credit, which was available to all homebuyers, the governor’s office confirmed late Wednesday.
| Plans | Old Credit | Proposed Credit |
|---|---|---|
| Total Allocated | $100 million | $200 million |
| Qualified homebuyers | 10,659 | na |
| Credit amount | 5% | na |
| Maximum credit | $10,000 | $10,000 |
| Home Type | new only | new & existing |
| Minimum occupancy | two years | na |
In addition, the eligibility period would be just four months under the new program, compared to a year the first time around. Only homes purchased between May 1 and Aug. 31 would be eligible for the credit.
On the other hand, the total amount of tax credits under the governor’s proposal would be doubled to $200 million. And the program has been expanded to offer tax credits for both new and existing housing. Under the old program, only new home purchases qualified for tax credits.
Other details of the governor’s proposal have yet to be released.
Meanwhile, the state and Southern California chapters of the Building Industry Association praised the governor’s proposal. The California BIA issued a press release quoting President and CEO Liz Snow as applauding the proposal:
“The tax credit program enacted last year was tremendously popular and proved to be successful in helping to push prospective buyers off the fence and stimulate the homebuilding sector. Enacting a new homebuyer tax credit and streamlining the building process would definitely help continue that positive momentum and help our economy recover more quickly.”
Added Rich Lambros, CEO of the SoCal BIA:
“The reality is newly constructed homes create jobs – up to 3 new jobs for every single home built. Renewing the homebuyer tax credit is a critical step to take towards creating jobs and generating more positive economic activity. Additionally, the new tax credit would more than pay for itself, since building a new home generates some $16,000 in state tax revenues alone.”
Here are some back-of-the-envelope estimates of the proposal’s impacts:
- Since just under 10,700 homebuyers qualified for $100 million in tax credits under the initial program, it’s likely that more than 21,000 may qualify under the new program.
- If all those qualifying for the tax credit bought existing houses at the median price, they would generate $3.3 billion in gross home sales revenue.
- If all those qualifying bought new houses at the median price, they would generate $3.5 billion in sales revenue.
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