Jim Guido's Blog

Today the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) praised California Governor Arnold Schwarzenegger for his leadership in signing the Homebuyer Tax Credit legislation into law. The California Association of Realtors, which I am a proud member of, was successful in its efforts to get this bill passed and signed into law. California’s previous home buyer tax credit program was so successful that it ran out of tax credits by the end of June 2009. Unlike last year’s legislation, the Homebuyer Tax Credit signed into law today adds a tax credit for the purchase of an existing home by a first-time home buyer. Below is description of how the tax credit bill works.

AB 183 will provide $200 million for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

I am in full support of the legislation recently introduced by Representative Eliot Engel (D-NY17) that would amend the Internal Revenue Code of 1986 to eliminate the so called “marriage penalty” from the Home Buyer Tax Credit. The current guidelines require both spouses to have the same exact ownership history in order to claim the tax credit. This is unfair and a standard that does not apply to unmarried couples, effectively penalizing married home buyers. The Worker, Homeownership, and Business Assistance Act of 2009 provides a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence and a tax credit of up to $6,500 for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The tax credit is available for eligible purchasers who are in contract by April 30, 2010 and close by June 30, 2010.The bill called H.R. 4701,was introduced by Representative Eliot Engel (D-NY17). It will provide relief to certain married couples who would otherwise be ineligible for the first-time home buyer credit. The bill provides that married individuals filing a joint return would qualify for the appropriate credit even where one spouse is ineligible. For example, if one spouse is a first-time home buyer and the other is ineligible, the couple would be treated as first-time home buyers. However, such a couple could qualify for up to $4,000 as opposed to the full $8,000 tax credit. I hope you support this too, and if you have the time let your elected representatives know how you feel about this.