Tax Credit Extension in the Works!
Tuesday, June 23rd, 2009
***Update – 2010 California New Home Tax Credit Take Effect 5/1/10 – Details Here***
The Franchise Tax Board announced on Monday an interim extension of the California Tax Credit for New Home Purchases. This extension will likely extend the application period for tax credit requests for another week or two. The details of the extension are outlined in the FTB press release below:
State’s New Home Tax Credit Going Fast
Released: June 22, 2009
Sacramento –The Franchise Tax Board (FTB) announced today that the $100 million allocated by the state in new home tax credits will soon be gone.
As of June 17, 2009, FTB had received more than 9,800 applications claiming nearly $95 million. Because some of these applications are duplicates, revisions, or invalid, FTB plans to accept 12,000 applications. This will ensure enough valid applications will be available to allocate the full $100 million credit. However, FTB will only issue approved credit certificates until the $100 million is exhausted.
When 11,000 applications are received, FTB will update its Tax Credit for New Home Purchases web page at www.ftb.ca.gov each business day with the new totals. Once FTB receives 12,000 applications, the fax service will be disconnected.
This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010 purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. To apply, an Application for New Home Credit must be completed by the buyer and seller within one week after the close of escrow and faxed by the escrow person to FTB at 916.845.9754.
To expedite the processing of applications, qualified buyers are reminded to: submit only one application per new home purchase, only send in the application after escrow closes, and complete the application carefully and accurately. Applications received before escrow closes will be denied.
FTB will continue to report the certificates issued on a weekly basis until the full $100 million has been allocated. FTB expects to complete processing all certificates in August. Each applicant will receive a notification indicating the amount of credit allocated or denied.
In addition, the California Building Industry Association is working with the state legislature to modify the Tax Credit bill and allow the FTB to make full use of the allocated credit amount. The timing of this new legislation is critical to keeping the Tax Credit program up and working. California home builders are touting the successes of the first bill and looking to our elected leaders to continue a “real stimulus plan” that provides new home buyers with incentives to put the construction industry back to work. Independent financial analysis shows the Tax Credit generates approximately $16,000 of revenue to the State and $3,000 of revenue locally for each $10,000 credit authorized. This is a stimulus bill that makes money and puts people back to work!
Stand by for more up to the minute news on the possible extension of the California Tax Credit for new home purchasers!
[...] Riverside division president, for one, was notably encouraged by the tax board's announcement in his blog post from yesterday. He added:"In addition, the California Building Industry Association is working with the state [...]
A massive deception is the best way to sum up this little gem. The State tax credit is actually spread over 3 years @ (see that symbol, kiddies? It doesn’t stand for “at” but is an accounting symbol meaning “at a cost of.”) $3,333 per year. It is not a refundable credit like the Federal credit; it is not a non-refundable credit the unused portion of which may be carried over to future years; rather, it is a “use it or lose it” credit, meaning what portion remains unused is lost. The State lies to is when they say they have set aside 100 million for this thing! When all the dust settles 4 years from now, only a fraction of that 100 million would have been used to offest tax. So, where do you suppose the unused allocation will go? Did somebody say “slush fund?”
Tax Guru,
I understand your comments, but this was not a “hidden” proviso at all. In my first post on the State Tax Credit ( Feb 19th), I laid out the differences between the Federal and State Tax Credits. At that time, the State Tax Credit rules were still not clear. On March 2nd, the Franchise Tax Board started to accept applications for the California Tax Credit. On that same day, in response to my Update Post on the Tax Credit (Feb 27th), I answered a comment about the Tax Credit being non-refundable. Which means, your credit is limited by the amount of State Tax liability you have for each of the three years the credit is applicable.
As of Friday (June 26th) the State Budget has not been resolved. There appears to be $62 million of “unused tax credit” in the discussions about balancing the budget. But, there are also very strong voices arguing against the use of these funds for anything but a fulfillment of the Tax Credit plan that has been put in place.
The Tax Credit for new home purchases is working. Builders are starting new homes across the state and buyers are tired of dealing with the foreclosure debacle. We see it every week in our sales office. More and more, buyers want to purchase new homes and get the tax credit. This puts California citizens back to work. It generates improved property tax revenue, sales tax revenue, and income tax revenue for the state and impact fees for local jurisdictions.
I do not believe there will be any “slush fund” for legislators to plunder from the State Tax Credit program. The program is working too well and generates far more revenue for the state and local jurisdictions than it provides to new home purchasers. But, if it does happen, you will hear it here first!
Steve
Sarah,
Thanks for the plug! I’ll keep you informed of the progress we make over this week.
Steve