The state of California has rewritten and re-established last year’s $10,000 home buyer tax credit, allocating $200 million to the credit for homes purchased between May 1, 2010 and August 1, 2011. The credit is worth up to 5% of the purchase price, up to a maximum of $10,000, and is spread out over three years ($3,333 per year). As opposed to the federal home-buyer tax credit this is not a refundable credit.
California Association of REALTORS® president, Steve Goddard, said the tax credit will help create even more incentive for first-time home buyers to purchase abandoned and foreclosed homes. “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.”
“The tax credit will help push prospective buyers off the fence, clear out inventory, and jump-start the home-building industry, which will help create jobs and reinvigorate the state’s economy,” said Liz Snow, CEO and president of the California Building Industry Association, in a statement.
With this move California helps ensure the state’s real estate market, and with it the already fragile economy, doesn’t take a nosedive when the federal tax credit runs out this Summer. But like that tax credit is running out of time the state’s may run out well before it is set to expire at the end of next August. The California credit is first come, first served. Once the $200 million is used up, it’s gone. And while this pool of funds is twice as much as the last one it still promises to go very fast. Especially considering how many home-buyers will now be eligible for the credit that were not last time…