California Tax Credit Gets New Life?
Tuesday, October 20th, 2009
***Update – 2010 California New Home Tax Credit Takes Effect 5/1/10 – Details Here***
The State Senate has approved an extension of the California Tax Credit for new home purchases! On October 14, 2009, the State Senate voted 35 – 1 to approve Senate Bill 37xxx. Senator Roy Ashburn (R – Bakersfield) is the author of the Bill. Senator Ron Calderon (D- Montebello) and Assemblywoman Anna Caballero (D – Salinas) are the principal co-authors. The Bill now returns to the State Assembly where it will be voted on early next week. Then it must go to the Governor’s office for approval to establish the effective date of the Bill.
The Bill allows for the 30% of the original allocation (of $100 million in tax credits) to be applied to new home purchases that closed escrow between March 1, 2009 and July 2, 2009 (and did not receive a Tax Credit allocation) and that will close escrow between the effective date of this Bill and March 1, 2010. That means approximately 4,300 additional requests for the California New Home State Tax Credit would be considered by the Franchise Tax Board. Many questions still remain with regards to the application process and existing unfulfilled application requests. For example:
1) There are 1,479 pending applications, filed through July 2, 2009, that have not received a Tax Credit authorization. Will these applications be re-visited?
2) Since the application must have been be submitted no earlier than one week prior, nor more than one week after the close of escrow, and in no case later than July 2, 2009, how many of these 1,479 pending applications are valid?
3) Any new applications will have to be submitted at the close of escrow, after the effective date of the new Bill. How many new applications will be considered?
4) The Franchise Tax Board received an average of 670 applications per week for the original Tax Credit. If half of the outstanding credits already applied for are approved, that leaves about 6 weeks for new applications to be filed. How quickly will these credits be utilized?
These and other questions will be answered by the legislature and the Franchise Tax Board in the next couple of weeks, assuming the Assembly passes SB 37xxx (they passed the earlier version of the Tax Credit Bill AB 765 by Assemblywoman Caballero, 71-4) and assuming the governor signs the new Bill into law (he has stated his intent to do so).
The next step is passage by the Assembly. That vote could come as early as October 27th. Then, it is anticipated the Governor will receive the Bill on his desk within a week. Check back regularly for further updates!
When will the CA state tax credit for new homebuyer be extended??When is the governor going to sign the bill??
Thanks,
Alice,
I am greatly disappointed by our State Legislature, specifically, our state Assembly and it’s leadership. The State Senate did approve a modification to the original California Tax Credit legislation to allow approximately 4,200 more new-home buyers to apply for the $10,000 Tax Credit. When the legislation was delivered to the Assembly for confirmation, the Speaker of the Assembly refused to allow the item to come for a vote … because of party politics! Seems that our Democratic Speaker did not like the fact that a Republican Senator had his name on the bill as the author. So, please thank your Democratic Speaker for the Tax Credit bill’s failure. She again proved that petty politics are more important to our elected officials than getting the California economy working and more important than getting our California citizens working.
I will let you know if there are any changes in this partisan stalemate.
Steve
Hi Steve,
I am one of those homeowners who went into escrow on a new home in June 12, 2009 and closed July 16, 2009. I missed out on the credit by 14 days. The credit was my major incentive in choosing a new home. I have written all of my legislators and have received no response. Half my street is in the same situation. Have you heard of anything that would give those of us hope? This was really devastating to me. This extension is taking the tax credit I got shorted to give it to others…
Hello Aimee,
I share your frustration and disappointment. The former Speaker of the Assembly, Karen Bass, refused to bring the extension bill back for a vote … because of partisan politics! It was a major embarrassment for the Legislature as a whole.
The California Building Industry will continue the fight. We will be working with the Legislators early next year to re-introduce a Tax Credit bill. How that bill gets worked through the Legislature remains to be seen, but rest assured we will not let the issue go quietly.
The extension that we were pushing for in September would have recognized those buyers that had already applied for the tax credit, but were not authorized a tax credit for accounting reasons. How the new bill language will be fashioned will be determined by the legislature when the bill gets introduced.
I will have more information as that new bill is entered into the system and begins its approval process. I will report back at that time.
Steve