Just as one government homebuyer tax credit program ends, another begins.
The homebuyer tax credit signed into law in March by Gov. Arnold Schwarzenegger is available effective today.
Assembly Bill 183 established a tax credit of $10,000 or 5 percent of the purchase price of a newly built home and a $10,000 tax credit for first-time purchasers of existing homes.
The credit is good through Dec. 31, or until funding is exhausted, whichever comes first.
The $200 million allocated for the program is split evenly, with $100 million going to purchasers of new homes and $100 million to first-time buyers of existing homes.
AB 183 was co-authored by Assemblywoman Anna Caballero, D-Salinas, and state Sen. Roy Ashburn, R-Bakersfield.
More information on the state tax credits can be viewed at www.ftb.ca.gov/individuals/new_home_credit.shtml.
The state program is kicking in just as federal homebuyer tax credits end.
Congress included the temporary tax credits in the economic stimulus package signed into law shortly after President Barack Obama took office last year. Lawmakers, after intense lobbying from the real estate industry last fall, extended it until Friday.
Homebuyers who had signed contracts in hand by Friday's deadline have until June 30 to complete their deals, and according to state officials, can also take advantage of both tax credit programs up to that time – a potential tax credit boost of up to $18,000.
Supported by a tax credit, a pending home sales index rose a seasonally adjusted 5.3% in March and was up 21.1% compared with a year earlier, the National Assn. of Realtors said Tuesday.
The index tracks sales contracts on existing homes and is considered a good indicator of actual sales, which are recorded a month or two later at closing.
For March, sales contracts rose 12.7% in the South, 1.9% in the West and 1.2% in the Midwest. Contracts declined 3.3% in the Northeast from a month earlier.
"Clearly the home buyer tax credit has helped stabilize the market," said Lawrence Yun, chief economist for the real estate lobbying group, in a statement. "In the months immediately following the expiration of the tax credit, we expect measurably lower sales."
To qualify for the extended and expanded home buyer tax credit, a sales contract must have been signed by April 30 and the sale must close by June 30. Analysts expect the tax credit will also support contract signings in April.
In February, the pending home sales index rose 8.3%, compared with an earlier estimate of an 8.2% gain.
The strong results in February and March probably reflect an increase in demand before the credit expires, according to an analysis from Barclays Capital Research.
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