Schwarzenegger Puts His Signature on Homebuyer Tax Credit
March 25, 2010
CBIA's top priority in the 2010 legislative session became a reality Thursday when Gov. Schwarzenegger signed an expanded homebuyer tax credit into law during a ceremony in Fresno.
Schwarzenegger was joined at the ceremony by the bill's authors, Assemblywoman Anna Caballero, D-Salinas, and Sen. Roy Ashburn, R-Bakersfield, as well as CBIA Chairman John Young.
“This is going to help, of course, the building industry, and it will create a lot of jobs, because as you know, as we sell those homes, then you have to build new homes," Schwarzenegger said. "And when you build new homes that means that you will have to hire carpenters, cement workers, electricians, plumbers and roofers, and the list goes on and on.”
The legislation, overwhelmingly approved by both the state Senate and Assembly on Monday, goes into effect May 1.
CBIA leaders praised the action.
"The tax credit will help push prospective buyers off the fence, clear out inventory, and jump-start the homebuilding industry, which will help create jobs and reinvigorate the state’s economy,” said CBIA President Liz Snow.
Purchasers of newly constructed, previously unoccupied homes on or after May 1 will become eligible for up to $10,000 or 5 percent of the cost of the home -- whichever is less -- to be paid out in equal installments over three years. In addition, first-time homebuyers purchasing an existing home also are eligible.
"We recognized that it was really important to get the current inventory of homes sold so that we could get them back on the tax rolls for local government, so that we could get families in them," Caballero said. "And to provide an incentive for people to get off the fence and move into becoming purchasers was very, very important for us."
A total of $200 million in funding has been set aside for the program, with the money split evenly between new and existing home purchases. The program will run until the end of the year, unless funding runs out prior to that date.
A similar program for new home purchases was in effect last spring in California, but the $100 million pool of money was exhausted in about four months. During that time, builders experienced a spike in traffic and sales at their developments.
Gov. Schwarzenegger is hoping for the same results this time and included the homebuyer tax credit as one of his five key points in a jobs package announced during his State of the State address in January.
"When people are working, they're able to share in the California Dream and their dollars pulsate through the system," Ashburn said. "They're in a better condition to pay that mortgage and buy the groceries and put gas in the car and do all the things that families do."
Young said builders are excited because the tax credit will boost sales and allow them to start hiring again, and not just construction workers.
"Think of the architects, the civil engineers, the salespeople that sell our homes, the architects, the furniture, the model decoration," Young said. "There are all kinds of people that are involved in bringing these homes to market."
-- Greg Robertson
Photo credit: Justin Short, Office of the Governor
