by Broderick Perkins
(03/28/2010) A repeat windfall for home buyers, and once considered as hopeless as a balanced budget in the Golden State, California's popular home buyer tax credit is back -- and it's better than ever.
In fact, it's twice as good as it was before.
The Golden State's home buyer tax credit sequel, AB 183, recently signed by movie star Governor Arnold Schwarzenegger, is back and it's upstaged the original deal by providing $200 million in home buyer tax credits, double the original $100 million for qualified first time home buyers who purchased new homes, and the new version is not just for first-time home buyers.
"I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy and today I am proud to take action and put it into law," said Governor Schwarzenegger at the legislation's signing ceremony.
At 12.5 percent, California has the fifth highest unemployment rate in the nation.
The new law's $200 million allocations is split 50/50 between eligible first time home buyers who purchase an existing home and anyone purchasing a new home. First-time buyers are defined as those who have not owned a home in the past three years.
"The American dream is on sale. It's the Blue Light Special of home buying in California!" exclaimed Julie Larsen Wyss, a broker associate with Intero Real Estate in San Jose, CA.
Unfortunately, the immediately obvious flaw in California's home buying carrot is that it takes effect May 1, 2010 the day after the existing and also expanded federal home buyer tax credit is scheduled to end, April 30, 2010.
When both the California and federal home buying tax credits were available simultaneously, Californians struck a mother lode of a home buying tax credit up to a maximum total of $18,000.
The first $100 million tax credit, approved in February 2009 was only for first time home buyers who purchased only new homes. Funds ran out after just four months with 10,659 Californians claiming the credit.
Under the new California home buying tax credit there's $100 million for first-timers purchasing resale homes and $100 million for anyone buying a new home. There's no limit on the price of the home and no income limitations on buyers.
The tax credit is equal to the lesser of 5 percent of the purchase price or $10,000. It is not a refundable tax credit like the federal tax credit but must be taken in equal installments over three consecutive years to offset state taxes due.
Home buyers taking the credit will be required to live in the home as their principal residence for at least two years or forfeit the credit by repaying it to the state. Buyers also must be at least 18 years old and be unrelated to the seller.
First come-first served eligible taxpayers must close escrow between May 1, 2010 and Dec. 31, 2010, or after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010.
Watch for clarifications from the states Franchise Tax Board
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