Happy Tuesday everyone! It has been an amazingly busy day here at Westside Properties. We've hosted an extremely busy broker open house today at our listing at 15901 Alcima Avenue(website) in Pacific Palisades.
Josh and I also had the opportunity to cruise PCH up to Malibu to check on our new listing at 6360 Cavalleri Road(website).
I ran across this article in the SFGate and figured to expose to my readers...especially the new-home buyers.
The $10,000 state tax credit for new-home purchases could be revived soon for a limited-run engagement.
Last week, the California Senate passed a bill 35-1 that would provide $30 million in tax credits to about 4,000 additional new-home purchases. The bill now moves to the Assembly floor, which could take it up as early as Monday.
A spokesman for Gov. Arnold Schwarzenegger says he "supports the idea of this bill."
In an earlier bill, the Legislature made $100 million in state tax credits available to anyone who bought a new, previously unoccupied home in California on or after March 1, 2009, and before March 1, 2010. The $10,000 credit must be spread over three years and can offset only up to $3,333 a year in state income tax.
The money was allocated on a first-come, first-served basis, and it went fast. Less than four months after the effective date, the Franchise Tax Board had received 11,925 applications representing more than $100 million in credits. It shut the door on new applications at midnight July 2.
Although it doled out $100 million in credits, the tax board estimated that about $30 million would go unused because many buyers could not claim the full $10,000.
To get the entire benefit, the buyer must owe at least $3,333 in state income taxes in 2009, 2010 and 2011. A buyer who owes only $1,000 in one of those years loses the remaining $2,333 for that year - it can't be paid out in cash or carried into future years.
The original bill didn't allow the tax board to reallocate unused credits to other new-home buyers, but the new bill - SBX3-37 - essentially would.
Pushed by the home builders, it would provide $30 million in tax credits to two groups of new-home buyers.
The first is about 300 people who bought a new house and got their paperwork in to the Franchise Tax Board by July 2 but missed out on the credit because the money was gone.
The other group includes people who buy a new house after the bill is signed and before March 1 - but only until the $30 million runs out, which could be long before March.
People who buy a new home after July 2 and before the bill is signed are out of luck.
Given that only 70 percent of the home credit is typically used, about 4,285 new-home buyers would qualify for the additional $30 million.
Sponsors say the bill is necessary to "facilitate California's economic recovery, a large part of which is the maintenance of the new-home tax credit." It was written as an "emergency statute necessary for the immediate preservation of the public peace, health, or safety."
Democrat Loni Hancock of Berkeley was the only senator to vote against the bill. She couldn't see "offering subsidies to potentially well-off people buying expensive homes while we are cutting the heart out of education," says Larry Levin, Hancock's spokesman.
She also questioned the fairness of offering a subsidy only to new-home purchases when there are so many foreclosed homes on the market.
When the bill was first introduced as AB765 by Assembly members Anna Caballero, D-Salinas, and Jose Solorio, D-Anaheim, it would have provided $200 million in additional tax credits on top of the original $100 million. But as the state's finances worsened, the increase was whittled down to $30 million.
When the Senate took up the bill last week, Republicans refused to support it (and other bills that needed a two-thirds majority) unless it had a Republican as lead sponsor. So the contents of AB765 were moved into SBX3-37 with Sen. Roy Ashburn, R-Bakersfield, as the principal co-author.
