March 26, 2010
Tax Credit Extended
Seems like the new regulations and tax credits are hanging around longer than the original expiration dates. Seems as though Government officials come up with a plan and simply toss the idea into the market and wait to see what happens. When they see the plan is effective and the turnout is positive they extend it, which is what they are doing with the tax credit. If regulators see that the plan is not as effective, for example the Home Affordable Modification Program, they add more regulations to ensure the program is successful.
On March 25, 2010 our Gov. Arnold Schwarzenegger signed a new bill, the tax credit bill, Assembly Bill 183, which will go into effect on May 1, 2010. Up to $10,000 tax credit will be available to about 32,000 homeowners in California.
The bill is expected to allocate $200 million to the tax credit. Half of the funds will go towards for consumers buying new homes and the rest will be funding available for first time home buyers buying resale homes. Each year up to $3,333 can be claimed, depending on the amount of tax credit received. The new bill requires that buyers live in the home for at least two years or they will have to repay the state the amount of credit they received.
Tax Credit time line
- Qualified personal residence: On and after May 1, 2010, and on or before December 31, 2010
- Qualified principal residence: On and after December 31, 2010 and before August 1, 2011
Other Bills on the List
- Ban on taxing forgiven mortgage debt
- Schwarzenegger signed the bill in 2008, which was set to expire in two years. He would like to extend this bill before April 15, 2010.
- One of the provisions in the bill was not in the Governor’s favor. The SBX8 32 by Sen. Lois Wolk, D-Davids. This provision fines businesses that would like state tax refunds.
- There are two upcoming bills in review in the Legislature regarding the tax relief on forgiven mortgage debt.
Public’s Opinion
Tax credit will “…jump start the home building industry, which will help create jobs and reinvigorate the state’s economy.”
- Liz Snow, chief executive officer of the California Building Industry Association
“…will incentivize first-time homebuyers 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.”
- CAR President Steve Goddard
