Two tax credits a boost for eligible homebuyers
| Thursday, Feb 26 2009 10:06 PM
Last Updated Friday, Mar 27 2009 12:58 PM
Homebuilding advocates hope a state tax credit for new homes that takes effect Sunday will be the incentive prospective buyers need to get into the market.
It applies to newly built, previously unoccupied homes and offers 5 percent of the purchase price, up to $10,000.
Homebuyers can apply the credit to their state income tax returns for three consecutive years — $3,333 per year starting in tax year 2009.
The state allocated $100 million toward the credit, which is available on a first-come, first-served basis to 10,000 homebuyers. You do not need to be a first-time buyer to qualify.
Eligible homes are those that close escrow starting Sunday, and continuing through Feb. 28, 2010.
“This is something that our industry has been desiring to have for quite some time,” said Layne Marceau, president of the Northern California division of Shea Homes, during a conference call with reporters Thursday.
Homebuilding is “an economic engine. The whole intent here is to stimulate sales activity, the ability to start housing projects again, get the state economic engine moving again. We believe the housing industry is the catalyst to do that.”
Information about the credit should be available Friday on the state’s Franchise Tax Board’s Web site: www.ftb.ca.gov.
Homebuilders have to submit paperwork to the tax board about the purchase, and buyers must certify they will live in the home as their primary residence for at least two years, said Brenda Voet, a tax board spokeswoman.
The tax board will track and share with the public how many tax credits have been used, she said.
In some cases, the state tax credit can be applied with the federal government’s up to $8,000 tax credit, creating an $18,000 benefit. The federal tax benefit is only available to first-time buyers, but isn’t limited to new homes. It requires buyers to live in the dwellings for three years. Certain income limits apply.
Bakersfield builder Matt Towery is working with a married couple who could take advantage of the larger tax credit.
They’re buying a home in his Northwood Ranch tract, and escrow was originally slated to close Friday, he said. But because of the state tax credit, escrow will now close Monday.
“The timing was perfect,” Towery said. “They asked if they could delay closing while we put this thing together. We were delighted to do so.”
The credit’s inclusion in the state budget was critical in winning state Sen. Roy Ashburn’s support.
“I would not have voted without this,” Ashburn said. “I made it clear I would not vote in favor of the budget without this.”
The Bakersfield Republican believes the tax credit will help boost home sales, which will help create construction jobs throughout the state.
“These are idle hands. The more hands we have back at work, earning incomes and paying their taxes, the better off it’s going to be,” Ashburn said.
The official word from Sacramento is equally positive.
“The governor fought for stimulus measures like the $10,000 housing tax credit to encourage homebuyers back into the market and stimulate California’s economy,” said Camille Anderson, spokeswoman. “If you are thinking of buying a new home but weren’t sure if it’s the right time, California’s new state budget might have just given you 10,000 reasons to move forward on a purchase.”
