House Builders are for the New California Tax Credit
March 1 marks the start of the new state tax credit of California allotted for buyers of new and unoccupied houses. Excited home builders are now doing quick and big campaigns around about the great tax break which is suited for the new model homes soon to be out in the market.
The tax credit gives March 1, 2009 to March 1, 2010 homebuyers a $10,000 off their taxes.
Just last week, the “Governator” signed a state budget that will eradicate a $40 billion deficit. But everything is still very unclear. No one has clarified whether the home buyer or the home builder will request for the tax break. No one is really sure what kind of documentation is necessary. House builders are not even sure on what stage of the sales process a March 1 beginning applies to.
Even with all these uncertainty, home builders just can not hide their exhilaration. The California version of the tax break not only approves first time buyers but also move-up buyers. Plus there was no income limit set. This means that even extravagant houses would sell and experience the $3,333 tax off for each of the first three years after purchase.
After the worst construction year for more than 20 years and great downsizings, project shut downs and bankruptcy applications, the tax credit hopefully stimulates new sales.
The state Franchise Tax Board has the obligation to set the implementing rules of the new tax credit program. They are still waiting for the bill language before thy can do their part for the taxpayers. Then they can clarify whether it applies to sales contracts signed after March 1 or to escrows that close after March 1.
The big deal of whether this project applies on March 1 sales contracts or closed escrows made home builders bustling to their lawyers for interpretation and in-house counsels researching.
The tax credit project was just approved last week and therefore very new. Home builders are just too excited with the hope of doing more home building projects thanks to the credit break. Everyone would just have to wait for the Franchise Tax Board to receive proper instructions before they can do more advertising of the tax credit for homebuyers’ interests.
