There is good news for those of you in California who are planning to buy a new home as well as for the builder’s community who are battling great slump in the real estate sector.
Last week California Lawmakers approved $10,000 Tax credit for home buyers in an effort to give impetus to the state’s recession hit real estate industry. This credit will hopefully motivate those perspective home buyers who are planning to buy their dream home.
We are not yet sure how successful this proposed $ 10,000 Tax Credit for home buyers will be or how much it will help in rejuvenating the real estate industry. But we can look at some of the major points of this Bill.
CA Tax Credit Programs & Grants for First Time Home Buyers
(A). The credit will be applicable between the periods from March 1 2009 to March, 1, 2010.The Bill allocates $ 100 million for Tax credit, so after the purchase of 10,000 homes the credit amount will be over.
(B). This proposed $10,000 tax credit is not a lone and if you stay in that home for a period of two years you will not need to return any of that credit that you received. Another clause of this tax credit law is that it is applicable in the case of new homes only. If you buy an existing home you will not be eligible for the credit. Home buyers will receive the tax credit, in equal amounts, over 3-years.
(C). This $10,000 tax credit is applicable only when the newly purchased home is your primary residence. Otherwise you will not be considered for the credit
(D). There are no down payment requirements in order to be eligible for the this tax credit. So it adds to the good news.
(E). This California Tax credit for home buying is some what different from the earlier announced federal credit of $ 8000 for first time home buyers. The differences are:
- This California tax credit is not limited to first time home buyers and those with an existing home can also claim the facility; while the $8000 federal tax credit is only applicable to first time home buyers.
- Secondly there are no maximum income limitations in this Bill so any buyer who purchases a previously unoccupied can claim the tax credit irrespective of his or her income.
- Moreover, the $10,000 California state tax credit for home buyers can be enjoyed along with the $ 8,000 federal tax credit if you are first time home buyer. So if you are planning to buy a new home in California and you are also a first time buyer, then you can enjoy $18,000 tax credit.
Though the Bill has come as a relief to the Housing Sector of the state which is battling depression like situation due to the terrible condition of American economy, there are also some people who do not think that this bill is such a good idea.
I think this bill may end up trying to create an artificial demand for houses although in reality the demand has severely decreased. Moreover, by making it easy for some people to buy a home it can again create those situations of bad debts which are partly responsible for the poor state of the current economy.
But these are just doubts and may not turn into reality. Right now we can only wait and see how this $10,000 tax credit for home buyers influences the economy of California. We will hope for the better and will definitely keep our fingers crossed.
