Arnold Signs Bill extending tax credit!

I’m gratified to report that late this afternoon, Gov. Schwarzenegger signed Assembly Bill 183, the Homebuyer Tax Credit legislation, into law. His actions today are the result of our efforts in Sacramento over the last several weeks as members and our team in the capital worked for the bill’s passage before it landed on the governor’s desk.

AB 183 will provide $200 million for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

The positive impact of the federal home buyer tax credit is clear. Nearly 40 percent of first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered, according to C.A.R. research conducted last year.

The state’s previous home buyer tax credit program was so successful that it ran out of tax credits by the end of June 2009, eight months before it was set to expire and just as housing markets appeared to be turning a corner. Unlike last year’s legislation, AB 183 adds a tax credit for the purchase of an existing home by a first-time home buyer.

AB 183 will significantly contribute to the effort 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.

First Time Home Buyer Deadline drawing near!

The Worker, Homeownership, and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, includes tax credit benefits for select homebuyers. Here are some of the details:

• First-time homebuyers, or buyers who have not owned a home in the past 3 years, may qualify for a tax credit of up to $8,000.

• Existing homeowners, who have owned and occupied the same principal residence for a period of five consecutive years during the last eight years, may qualify for a tax credit of up to $6,500, after buying a new principal residence.

• Homebuyers must enter into a written binding purchase contract by April 30th, 2010, and close on the purchase by June 30th, 2010.

• Maximum annual income limits are $125,000 for individuals and $225,000 for joint filers.

• Home purchase price cannot exceed $800,000.