April 25th
Uncategorized

How Long Will the California Tax Credit Last?

The California Association of Realtors believes that California tax credit won’t last through May, 2010. California’s new tax credit program starting May 1, 2010 has allocated $100 million for: Buyers who haven’t owned a home in the previous three years/first time homebuyers Buyers of new homes Both categories of buyers will be eligible for a […]

The California Association of Realtors believes that California tax credit won’t last through May, 2010.

California’s new tax credit program starting May 1, 2010 has allocated $100 million for:

  • Buyers who haven’t owned a home in the previous three years/first time homebuyers
  • Buyers of new homes

Both categories of buyers will be eligible for a $10,000 state tax credit. These buyers can claim 5% of the value of their new property up to $10,000.

The program is supposed to last through December 31, 2010, but the California Association of Realtors’ (CAR) deputy economist Robert Kleinhenz predicts that the funds will run out within 10 to 20 days after the start date. In other words, by May 20th, 2010 the new tax credit program will come to a screeching halt due to the exhaustion of funds. 

CAR projects 64,000 homes will sell in California in May of 2010. If you divide $200 million by $10,000 you will find that a total of 20,000 homebuyers will be able to take advantage of the program provided the home costs $200,000 or more.  You can easily calculate that there is a delta of 44,000 potential buyers that qualify for the program but will not be able to do so because the state will have burned through the funds. 

If you are planning to purchase a home this spring and would like to take advantage of this program, make sure you close on your house no later than May 20th of 2010 to ensure there is still money left in the coffers.

I understand that after reading this article you may feel a little pressured, but who knows if there will be another incentive program? In any case it is most important that you find your perfect home, even if you will not be able to take advantage of this particular program.

Good luck with your home search! If you need any assistance, let me know.

 


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