As expected, California Governor Arnold Schwarzenegger signed AB 183 into law yesterday afternoon, establishing two important personal income tax credits for taxpayers who purchase a qualifying principal residence within the state. The first credit provides up to $10,000 in tax relief over three years for buyers purchasing a new home, defined as a home that has never been occupied. The second provides up to $10,000 over three years for first-time buyers purchasing an existing home.
The two credits take effect the day after the deadline to enter into a contract to qualify for the $8,000 federal first-time homebuyer tax credit. Theoretically, if a first-time buyer were to enter into a binding contract to purchase a home in California by April 30, 2010 and that escrow were to close between May 1, 2010 and June 30, 2010, the homebuyer would be eligible to claim combined federal and state tax credits of up to $18,000. With housing affordability at the highest levels in recent history, if that's not an incentive for buyers to purchase a home in California, I don't know what is!
For details on the new California home buyer tax credits, visit the Dream Team's California Home Buyer Tax Credit page or read my earlier blog post, entitled "California Home Buyer Tax Credits - First-Time Homebuyers, New Home Purchase."
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