CA tax break starts soon for new home buyers

KGO-TV ^ | 2-25-2009 | Nannette Miranda

[lainie]

SACRAMENTO, CA (KGO) -- Finally, some much needed good news for homebuyers in California. New homebuyers will get a $10,000 state tax break starting this weekend. It is part of the deal that was negotiated to get the state budget passed.

In a last minute deal to get Republican Senator Roy Ashburn to support the budget compromise last week, he asked for and got the credit. The properties in California must close escrow between March 1, 2009 and March 1, 2010. They must be brand new, single family homes that have never been occupied, and it must be the buyer's principal residence.

Californians can claim $3,333 a year for three years beginning with the 2009 tax year. It aims to help new homes compete with the glut of foreclosures.

"Back in 1975, the U.S. Congress enacted a tax credit identical to this one and it worked. It stimulated sales, doubled sales within a year," says Tim Coyle, from the California Building Industry Association.

"We've been allocated $100 million to give out this credit. And, it's on a first come, first serve basis. Once, it's been allocated, it's gone," says Brenda Voet, from the California Franchise Tax Board.

Even though the state's finances are tight, Governor Schwarzenegger says leaders had to do something to help ground zero of the housing crisis.

"I think that investing in California and making investments that brings the economy back and creates jobs always is very wise," said Governor Arnold Schwarzenegger (R) of California.

"If we all try doing what we can to put our confidence and our money back in, then that will really go a long way towards making things better," says Vanessa.

The Franchise Tax Board is still designing the certificate for the state's tax credit. It should be put up on their website on Friday.

[lainie]

This is nothing more than a homebuilders/developers bailout.

[lainie]

And it was a republican who held out for, and got it.

[DB]

That’s lame.

There’s severe over supply of homes as it is. We don’t need incentives to build more... It is going to take years to fill the currently built homes. What a stupid move...

[USNBandit]

It isn't just that this doesn't help the sellers of existing homes. With that tax break it directly hurts the sellers of existing homes.

This is at the same time taxpayers can expect IOUs instead of tax refunds from the state.

[dragnet2]

The developers that are sitting on empty new homes, built by low wage illegal labor, paid off the corrupt state government insiders.

[lainie]

Exactly. Anybody selling an existing home in California now has to compete with this $10,000 tax break for the new homes. Essentially the value of already-stressed real estate in CA just went down by $10,000/house.

BLATANT.
HANDOUT.
TO.
DEVELOPERS.

[SierraWasp]

"With that tax break it directly hurts the sellers of existing homes."

That's a fact, Jack! And that would include me!! Ashburn was once a good and decent human being!!!

[dragnet2]

My job took me to a high end development of new homes in the San Diego area about 2 years ago. The homes were about 3/4 of the way built. All through the new streets, there were hundreds of workers, framers, heating A/C installers, drywall installers etc....I kid you not, none of those people working could speak English...

I have a great dislike for big developers and those running these large construction companies. They are corrupt to the bone, and the same exact ones that paid off the government insiders in Sacramento for this sweet heart deal.

[calcowgirl]

Crack down on illegal immigration and you will have a HUGE housing SURPLUS.

So what does California do?

Subsidize more new housing.

How incredibly stupid.

[Steve Van Doorn]

This just lowers existing home values

Can’t these politicians do anything right?

[ArmstedFragg]

I’d love to see somebody do the math on this. Having bought the new house, you’d have interest and property tax write offs, you’d have the personal exemption, and you have an income tax rate under 10%. I can’t see this being of maximum value to anybody making less than 75 grand.

[calcowgirl]

Well, just to make sure that it was of max value to the lower income types, they spread the tax credit over 3 years: $3333 for 3 years.

I just glanced at the Assembly Analysis: sbx2_15

 FISCAL EFFECT  : General Fund revenue loss totaling up to $100  
          million, spread more or less equally over fiscal years 2009-10,  
          2010-11, and 2011-12, but probably somewhat less than this  
          maximum because some qualifying taxpayers may not have enough  
          tax liability to fully utilize their credits each year (the  
          credits are not subject to carry-forward and are not  
          refundable).

           COMMENTS  :  The intended purpose of this measure is to provide an  
          incentive for the purchase of builders' unsold stock of new  
          homes. Given the magnitude of unsold home inventory in  
          California, it is likely that the full $100 million would be  
          reserved before the end of 2009, perhaps in the first few months  
          of availability.

[blueplum]

lunacy - reward the builders who flooded the markets with homes and developments there were no buyers for

[ArmstedFragg]

Yeah, I saw the three for one split. You’d need over sixty grand of taxable income to use it all. One of these ‘typical’ new homes would give you thirty grand in interest and property tax on top of that. Add the personal exemption and my original guess was too low... make it about a hundred grand a year income before the tax break’s used up.

[calcowgirl]

It’s basically $100,000,000 more dollars out of taxpayers pockets to subsidize home builders.

Instead of a tax credit, all the builders/developers had to do is reduce the sales price by $10K (for the same effect).

It’s not enough to pay for welfare, now we have to subsidize all businesses, too.

Market economics seems lost on our legislators, both R and D.