So, where to start. The Governator is back at it again and this time he’s trying to make some changes before he’s out of office and some of those things are going to impact you. The Governor’s proposal to extend the $10,000 first time home buyer tax credit has been passed by California Legislature which means don’t worry about the federal tax write offs that have yet to see their second extension come into place. The tax credit would begin May 1st, 1 day after the Federal Tax Credit ends April 30th.
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The California Tax Credit used to be limited to a total of $100 million. This mainly only covered the purchase of new homes which was chewed up and spit out eight months prior to the expected end date of the project. The new bill expects to double the initial effort which previously credited over 10,000 home buyers. Currently the plan is to be expanded to $200 million and the funds are only available on limited basis but is expected to help about double the previous program did. Now though New and existing homes are eligible. The previous credit was for new construction only but the hill is looking to help stimulate sales of existing inventory with this expansion. This though as apposed to the Federal First Time Home Buyers Program, which itself was expanded to include current homeowners as well, for now will only apply to first time home buyers.
The current expansion though does include the guidelines for the $10,000 as being the Maximum Tax Credit but if 5% of purchase price is lower that it would be the new tax credit maximum. A mix of all these factors along with property values at the lowest they have been in years his is a great time for those out there to capitalize on the currently low interest rates. The inventory is high but I think that a strengthening of the market is just what the doctor ordered.
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