California Governor Signs New $10,000 Home Buyer’s Credit Bill
California homebuyers might be seeing a new tax credit of $10,000 soon. Despite the economic situation here in California, the governor has signed a bill offering this tax credit to home buyers.
California has a $20.7 billion deficit in the general fund budget over the next 16 months and owes $8.8 billion in short-term loans that need to be paid off by June. There is an additional $120-plus billion in outstanding bonds and interest that will be paid over decades.
The general fund revenues will be comprised of a projected 9% in debt servicing by the end of 2014-15. According to Bloomberg News, the market believes a developing country like Kazakhstan, with about 15.7 million people, is less likely to default on its debt than California, which is the eighth largest economy in the world.
Extension of the 2009 new home credit bill, AB 183, will provide about $200 million for home buyer tax credits. These credits will allocate $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes.
The new homebuyer must purchase a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010 or must purchase a qualified principal residence on and after Dec. 31, 2010, and closes the sale before Aug. 1, 2011. This purchase will enable them to take the allowed tax credit. The credit is the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Purchasers will be required to live in the home for at least two years or may forfeit and will have to repay the credit. (Before acting on this preliminary information for the tax credit, one should first consult your legal/tax professional.)
