The State of California’s tax credit amount is 5% of the sales price, or $10,000, whichever is less.
Because the state thinks that not every buyer will qualify for the entire $10,000, they are only reducing the tally of available money by $5,700 per applicant, and will figure it out later. There will likely be some angry applicants at the end:
From the State of California:
http://www.ftb.ca.gov/individuals/new_home_credit.shtml
The figures shown below are only estimates, based on small samples. The numbers are overstated as there will be duplicate, revised, and invalid applications included as we have not verified any of the applications. These estimates are only provided to give a general idea of the number of applications received and the amount requested for the First-Time Buyer Credit. We are showing 57% of the estimated requested credit since the $100 million cap will only be reduced by 57% of the credit allocated to the buyer. The amounts do not reflect actual amounts which will be allocated. These estimates will be updated each Thursday until we are sure that we have received more than enough applications to allocate the full $100 million. Once we determine that we have received sufficient applications to allocate the full $100 million, we will stop accepting applications for the First-Time Buyer Credit. Estimates for the New Home Credit will be provided once our computer system is completed.
Applications for received as of 05/04/10: 427
57% of Estimated Requested Credit: $2,350,708
How can a bankrupt state hand out tax credits?
Wow, so the state is expecting to see a bunch of sales at less than $114,000?
There are other reasons why a buyer wouldn’t get the whole tax credit. For instance, if the buyer doesn’t pay at least $3,333 in taxes to the state each year, they won’t get the entire credit. Also, the tax credit can’t reduce your taxes below your state tentative minimum tax.
Actually, I’m not sure if Jim is completely correct. I thought that they allocate 5700 per applicant, but then each applicant can claim the whole 10000, if they qualify. The $100M cap is really just an estimate or a goal (I thought). But reading through the web site again, this part confuses me.
Anonymous-Because the idiots in Sacramentio voted for it and our idiot governor signed the bill into law, that’s how.
NateTG-There are plenty of properties throughout the the state that cost less than $114k (and first time buyers will buy lots of those), although that doesn’t seem to be their reasoning.
Mark-Maybe they are estimating that, due to low purchase price or low amount of taxes owed, the average credit paid out is only $5,700, so they can keep paying them out until they give out 17,544 credits ($100 mil/$5,700), not 10,000 credits ($100 mil/$10,000).
I think these estimates are the same as aircraft seating, just a way to keep a rough track of how much is left, when to tell people to stop applying, etc. Everything else seems to say that when the total budgeted runs out, the party’s over even if you’ve already filed your papers.
I recently saw a TV news report on unhappy landlords in Arizona. They were losing tenants at an alarming rate because all of the illegals were fleeing to Colorado and California.
@ SWM #6
I am here in Phoenix and I see the same thing in the news too. Also I was talking with a real estate investor from CA this week who wanted to wait for the dust to settle on immigration reform. No sense buying residential investment property in Arizona now when they might be priced even lower shortly after a mass exodus of illegals.
BTW, the price for foreclosed property they were considering was around $25k per door. Already reasonably low.
I’ll bet the going rate for lawn service in Arizona just tripled.