The Governor of the state, Arnold Schwarzenegger supports the bill.
A previous bill made available $100 million in statewide tax credits to buyers who purchased any new, previously unoccupied home in the state. Homes must be purchased between March 1, 2009 and March 1, 2010. The ten thousand dollar tax credit offered must be spread out over a three year period, and has a state income tax offset limit of $3,333 per year. The credit was made available on a first-come, first-served basis and the funds were quickly distributed and exhausted.
Even though the funds were allocated, the California Franchise Tax Board estimated that approximately $30 million of the funds would go unused because many of the buyers would not be able to claim the full $10,000 on their income taxes.
Supporters of these state tax credits state that they are necessary to assist in the state's economic recovery. Opponents feel that the credits offer subsidies to buyers in higher income brackets who are purchasing higher priced homes, while other key areas such as education continue to receive budget cutbacks. Others question the relevancy of offering the credit to only new homes, while the market continues to be flooded with foreclosures.
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