Buying newly built? There could be $10,000 in it for you

For those of you out there shopping for newly built homes, that state tax credit of up to $10,000 for buyers starts Sunday.

The credit applies to purchases that close by March 1, 2010, or until the $100 million runs out, according to details released today by the California Building Industry Assn. The amount of the credit is based on the purchase price -- 5% of the sales price or $10,000, whichever is less. At the maximum amount the credit would be available to the first 10,000 new home sales. It will be available on a first-come, first-served basis by closing date.

The credit is spread out over three years and begins when filing state tax forms in 2010 for the 2009 year (for 2009 closings). Think three credits of $3,333 for those qualifying for the maximum.

The builder must certify that the home was not previously occupied to satisfy the state Franchise Tax Board, which will have move information on its website starting Friday. And the buyer must occupy the home or condo as their principal residence at least two years after the initial sale. Condo conversions do not qualify, but move-up buyers do.

Obviously, state builders hope this will give a shot in the arm to the home-building industry. Housing starts dropped 68% since 2005 when 208,000 new homes -- the high water mark -- were built to about 66,000 in 2008 -- the lowest number since 1954.

"What we've been missing in the market place for the last couple years are people, " said Tim Coyle, senior vice president of government affairs at California Building Industry Assn.

Note: The rules are different from the $8,000 tax break in the federal stimulus plan, but under certain circumstances buyers will qualify for both. Under the Fed plan, buyer income is limited to $75,000 for singles or $150,000 for couples and the house (new or existing) must be owner-occupied for three years. So first-time buyers making less than those amounts who live in their new homes for three years may qualify for both. That's $18,000 in tax credits.

-- Lauren Beale

Thoughts? Comments?

Photo: Builders hope to see "sold" signs such as this one on a Beazer-built house in Sacramento. Credit: Rich Pedroncelli  / Associated Press

Related posts:

State could offer a $10,000 tax break for buyers of new homes

First-time buyers get $8,000 tax credit in stimulus bill

Comments

[MyLessThanPrimeBeef]

And if you decide to move out of your mom and dad's cellar, and rent a condo, thus contribute your share to the campaign to prevent 4-plex owners from defaulting, there is no tax credit for you.

You are just a pariah.

[farinhite_451]

Cool! So I can act as Owner builder on a new prefab green home and get a 10K credit to do so? Wow! That's gre....

What's that you say? That doesn't qualify? You mean I have to build a huge tract of unsustainable crap boxes in a far flung water deprived inland empire city causing people to burn time and fuel sitting on congested freeways and waming the globe to qualify?

Hmmm. Awesome.

[dog-walker]

What good can come of this? If the measure succeeds in propping up the market, the cost of living (for everyone who doesn't already own a home) remains higher than it should, bleeding the economy drier than it already is and strangling the economic initiative of a whole generation of would be up-and-comers. If it fails, it merely wastes $$ while drawing a whole new set of dumber-than-a-box-of-hair knife catchers into an ongoing bloodbath.

[TC]

Basically someone complained about their developments sitting empty and paid for the hookers and blow that evening.

I love politics.

Urban sprawl is profitable!!

[Lodi]

if i bought a new home in july 2008, will i be quality to get 10k on my Tax return in 2009?

[Mucker]

Farenhite_451:

Awesome indeed. You are a very brilliant man able to see the obvious. You should be in politics. Oh yeah, I forgot, that's why you can't be in politics. I'd call this new program based on your apt insight the new fiddling as Rome burns. In this case Rome being our economy and environmental sustainability.

Here's how it would work for me if I qualified, which I don't cause I made $80,000 last year, I would as a civil service employee in the heart of LA county have to buy a new tract home in the far flung desert (yup Riverside is a desert) and create all that pollution driving a global warming machine too and fro in dense traffic. Of course I could take my 80K to a crime infested neighborhood in South LA or the valley and buy a rundown undersized crappy house like the ones that got listed on this blog as what $500K would buy back in the day when this blog was still smokin' good.

Suggestion for the blog. Check out the downtown news. That's actually a paper that recently posted an article on how loft developers are starting to sell lofts by auction. The one I saw claimed the developer was confident they would sell out. I'd love to see how that turned out. It was just weeks ago and is after all about LA real estate. Note. The prices were still too high to afford on my income not that I'd live in downtown LA if I could afford one.

[lanch fieri]

Mucker, the $8000 tax credit starts reducing at $75,000 income but doesn't phase out until you make $95,000. At $80,000 you will still get a $6,000 credit. Check irs.gov

[Rosie]

Mucker: I know you like being negative, but here's some good news. You would qualify making $80k for the state credit AND you don't have to move out of the city. You can buy a green-built condo near your crappy job, walk to work and not get mugged. Oh happy day. Now find something else to complain about.

And if you don't like the blog, here's a suggestion: don't read it.

[Fourth Generation]

The way prices are still falling that $10K will evaporate in an instant exposing you to lose your shirt in addition to any down payment. Knives catchers of the world here is a great opportunity to do some public service.

[Mucker]

So if I'm not rosie I shouldn't show up? But thanks for saying something positive about me. You know, that I "like" being negative. If you know what a mucker is you know the handle is a nod to dealing with the negative. Our country is in a mess, a mess that extends beyond the current economic issues and while I am mostly powerless to do anything real about it I can at least vent, I can exercise my right to "free speech". I am also only one of the many posters here who express negatives about the housing bubble and the govt response to it. So I will show up and share what I think. I just can't be Rosie. I'll leave that to Rosie.

That said I appreciate the advice from those pointing out that I can participate in the federal tax incentive. I read what Lauren wrote "singles earning to $75,000" and took it literally. If an opportunity occurs I will take it. I do feel badly that given my life circumstances I do not envision ever being able to buy in the neighborhood where I now rent. So most likely that opportunity will be inland or out of the state of California. Yes it bothers me that being in the 75th percentile of earners no where near qualifies me for buying a home in the 75th percentile. So take that as negative if you want - it's still realistic.

[Drew]

There are many new houses for sale within the LA city limits, often at steep discounts.

These were often put into the pipeline at the peak of the bubble, but by the time they were finished... well, you know.

How about a brand new 3br/3ba with 2000+ sq ft in 90065? List price $450k.

[RZ]

I understand that this $10K credit from the state is intended to "stimulate" home construction through providing purchase incentives. However, there's a downside to it. Many of these newly built homes are in these semi-luxury developments. They are often in the outskirts of town, meaning longer commutes, which result in more traffic, more smog, etc. Plus many of these homes have high ceilings and connected rooms, which means that it takes a lot of energy to heat or cool them. In other words, while this credit might stimulate home construction, there are a lot of negative implications for the environment.

[Lego Hater]

Mucker,

You'll probably be able to buy near where you rent. It just won't be before March 1, 2010.