California to expand $10,000 new home tax credit to include used homes too!

http://finance.yahoo.com/news/San-Francisco-REALTORS-Urge-bw-129...

Governor is expected to announce that the CA $10k tax credit for buying new (never occupied homes) is expanded to used homes bought by first time buyers. This is in ADDITION to the federal tax credit.

PLEASE NO POLITICAL DISCUSSION.

Stick to providing info on the new law, when it takes place, creative ways to use it etc

AKA property values in California are still inflated, and we want to put people bcak in the same predicament they were in previously by inticing them with a $10k tax credit IN ADDITION TO the gov't $8k

California doesn't want to lose tax revenue, so they'll probably never appropriately value the homes there.

No I heard on the news the Governor will announce its implementation today.

The link was the only relevant link I could find, obviously more info will be in the news soon. Be patitnet and be thankful I bring you the breaking financial deals.

but the $8k federal tax credit is expiring in April. Will this be extended?

Not trying to inject politics here, this is a purely financial question: Didn't California issue IOUs for tax rebates last year? And facing a monumental deficit this year, how long would one expect to wait to actually receive a $10k rebate?

There's got to be some shacks selling for $18K somewhere in that state.

the current CA credit for new homes is 5% of the home price, so assuming it stays constant youd need a 200k home to capture the full 10k

neophyte said: As it stands now it's a PR release by California Association of REALTORS duly signed by San Francisco Association of REALTORS, Jim Fabris

They might get it their way, but not yet.

No its not just a PR release. Please at least take the time to read what Ive wrote above.

The Governator is making an announcement on it today.

Watch the live webcast today
http://gov.ca.gov/

No wonder CA is broke lol.

Man bought my place 2 years too soon. =(

brettdoyle said: Governor: Hey guys we're broke and declared the state in a fiscal emergency. We have a $43 billion dollar deficit and cannot afford to pay tax refunds, schools, creditors, etc. We even tried panhandling 0bama for money. Anyone got any ideas?

Politician: Ohhh I got it. Let's pay people $10,000 for buying a house, something they would probably do anyway.

Governor: Nailed it!!!

Crap. getting those last 2 units rented in my 12-plex just got that much more difficult.

brettdoyle said: Governor: Hey guys we're broke and declared the state in a fiscal emergency. We have a $43 billion dollar deficit and cannot afford to pay tax refunds, schools, creditors, etc. We even tried panhandling 0bama for money. Anyone got any ideas?

Politician: Ohhh I got it. Let's pay people $10,000 for buying a house, something they would probably do anyway.

Governor: Nailed it!!!
To be fair to the governor, there isn't much he can do. The legislators are completely frictional, and the voters are bipolar.

While I am against the credit, it does make a lot of sense. California needs the home values to stay up in order to maintain a good amount of property taxes.

Guys,
I bought a home on Nov 4 2009 and missed the boat of extended and expanded bill signed by Obama on Nov 6 2009 by 2 days.
I missed it because we ( me and my wife) have an AGI close to $200K. We missed on the CA credit cause the home we bought was an already built one.
Now if we get the CA credit, it will be the Governor saying "Astalavista baby".

Hans

SUCKISSTAPLES said: CA has a decent head of steam on its housing market, and the incentive will keep demand strong as we plod through the glut of foreclosures which still havent made it to market. Its actually much more benfiecial than people think. Houses are being transferred from those who could never afford them to those who can.I've got to say that I'm becoming surprised with how affordable (compared to a few years ago) housing is becoming in California.

Still, as a fiscally responsible FWFer, I can't help but wonder where the prices would be now if the various tax credits, accounting rules for the banks, and low interest rates that affect the housing market were to go away. I think I would be able to get a better deal without the credits, low interest rates, etc if the market were running without government intervention but it is hard to estimate or quantify this. I have reservations about buying a house with so many factors affecting prices out there that will be going away before I later sell the house.

Looks like the previous credit went fast. The program started on March 1, 2009 and the FTB stopped accepting applications for the credit on July 3rd. They only had 100million to give away and it benefitted 10,659 people.
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

SUCKISSTAPLES said: Saying "screw the incentives and let prices freefall" doesnt benefit anyone.

It would benefit potential home buyers and financially responsible tax payers.

SUCKISSTAPLES said:
Current sellers would either net much less or take their homes off the market

Then they'll still want to sell at some point which will prolong the economic recovery and hold prices down in the future. Can you imagine all of the shadow inventory out there right now of people that want to sell but cannot because of negative equity? People bought homes thinking "I'll just stay in it for 2 years, and it will go up 10% in value a year, and then I'll have so much equity that we'll buy the home we actually want". And just think of how many unintentional negative cashflow landlords will jump at the chance to sell if home prices were to go up?

SUCKISSTAPLES said: Prop tax revenues would be lower

Lower property tax is postive news. There's a good reason why people are moving in large numbers from high tax\high cost of living states like California and New York to low tax states like Texas.

SUCKISSTAPLES said: once the glut of foreclosures is processed and transferred to people who can afford them, these incentives wont be needed. Right now we have a pool of homes that otherwise wouldnt be coming on the market, and these need to be absorbed into the market so that we can have a more normal inventory of homes for sale.How exactly are we guaranteeing that the people buying these homes are the ones that can afford it?

Between 8K from the government and 10K from CA, most borrowers have the 3% FHA downpayment without having a dime of savings. Many people buying these homes are stretching themselves to the max to afford the homes and betting that prices will rise.

If the government didnt have the incentives and home sold for ~18K less, there is no net difference to the buyer as long as the buyer was worthy and had savings(ie the kind of buyers who could afford a home). Infact, some would argue that it is better.

tx has one of the highest prop taxes... A $200k home has a $500 monthly prop tax bill

A $200k ca home has a $190 prop tax bill

http://www.thecalifornian.com/article/20100315/NEWS01/100315015/1002/Gov.+Schwarzenegger+visits+Salinas+to+promote+tax+credit

Posted two hours ago:

"Governor Arnold Schwarzenegger held a press conference today in Salinas to highlight his proposed homebuyer tax credit, part of his jobs plan."

Doesn't sound like much of a sure thing at this stage.

SlimTim said: I bet prop 13 makes property tax rate increases extremely difficult for CA. The whole point of it is that your taxes won't increase from the time you buy. Unfortunately for the state, you can get your taxes dropped if the property value drops from that initial value. So long time property owners get away with some of the lowest effective property taxes in the country. A change in ownership or "significant" upgrade to the property are the only ways the state is supposed to be able to reset the property tax to current market value.

It gives CA a pretty special case to benefit from churning in property ownership. In the expensive areas, a change of hands on a property that's had the same owner for 15 or 20 years might even raise the property tax by $10k on that property in the first year.

That is also WHY values in those areas are so high. if you are paying $700/year property tax on a 500k house and you've had the house for 15+ years why sell and move?. Very few people are going to voluntarily sell those houses (unless they refi'd and are underwater). Sure maybe they want to move, but that extra 4.3k/year in savings is going to make it worth it to hold on to the house and rent it out.

For people in other areas where prices have dropped they can get their valuation adjusted BUT it can go right back up to where it was if house prices rise.

calwatch said: Therefore, the FTB is averaging that the majority of taxpayers will only receive 57% of the benefit of the tax credit, and as such, the credit is only 26% exhausted, not almost 50% exhausted as you might assume from looking at the number of applications.

Small correction: The 57% calculation actually comes from the state law, not the FTB.

Also note, this is just for first time homebuyers. The credit for new homes uses 70% for the calculation.