From the U-T:
A $100 million new-home state tax credit is likely to be exhausted within days, prompting builders to press legislators to add $200 million to the kitty.
Valued at up to $10,000 per buyer, the credit was passed in March as a way to clear out unsold inventory at California housing tracts and to jump-start new construction. The state Franchise Tax Board said yesterday that 9,145 buyers had claimed $88.3 million in credits, leaving less than $12 million available. The California Building Industry Association said that means the funds could all be spoken for within about 10 days.
“We knew the tax credit would be successful, but we had no idea it would be this successful or that funding would run out in just four months,” said Tim Coyle, the association’s senior vice president. He said three bills are making their way through the Legislature to add $200 million to the tax credit fund. One already has been passed by the Assembly, he said.
“We’re pushing very hard to get this done in the next two weeks,” Coyle said.
The tax board estimates that the credit might actually cost the state only $59 million rather than $100 million because so many buyers will not qualify for the $10,000 maximum.
With building permits up from year-ago levels, the builder group says every new home built generates about $16,000 in state and local taxes, thereby offsetting whatever the credit costs. Coyle said these calculations are causing many lawmakers to look favorably on an expansion of the credit, which is due to expire in March. It comes on top of an $8,000 federal tax credit available to first-time home buyers, who can apply that credit to new or existing homes.
“I’ve never seen such strong bipartisan support for a housing bill,” Coyle said.
He acknowledged that legislators are simultaneously wrestling with a potential $24 billion state budget deficit.
“The big question is, can the tax credit be extended within the budget constraints the state is under? That’s what we’re working on,” Coyle said.