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INCOME TAX CREDIT
SBX2 15 (Chap. 15); adds and repeals R&T section 17059
Effective Feb. 20, 2009
Background: This new law sought to encourage consumers to purchase new homes by initiating a three year tax credit. However, this law’s effectiveness is limited because the available funds have been used. Furthermore, some qualifying taxpayers may not have enough tax liability to fully utilize their credits each year, since the credits are not subject to carry-forward and are not refundable.
The new law: Establishes a personal income tax credit for buyers of new home to be used as a principal residence. The tax credit is the lesser of $10,000 or 5% of the purchase price of a new principal residence – one that has never been occupied. However, the total amount that may be claimed under this bill is $100 million, given on a first-come, first-served basis. This law went into effect February 20, 2009, and purchases have to be made between March 1, 2009 and March 1, 2010.
The credit is provided in three equal amounts – one third each year. The taxpayers must live in the home as their principal residence for at least two years, or they may have to repay any tax credits received.
For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
Web site: dca.lacounty.gov