Buying newly built? There could be $10,000 in it for you

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For those of you out there shopping for newly built homes, that state tax credit of up to $10,000 for buyers starts Sunday.

The credit applies to purchases that close by March 1, 2010, or until the $100 million runs out, according to details released today by the California Building Industry Assn. The amount of the credit is based on the purchase price -- 5% of the sales price or $10,000, whichever is less. At the maximum amount the credit would be available to the first 10,000 new home sales. It will be available on a first-come, first-served basis by closing date.

The credit is spread out over three years and begins when filing state tax forms in 2010 for the 2009 year (for 2009 closings). Think three credits of $3,333 for those qualifying for the maximum.

The builder must certify that the home was not previously occupied to satisfy the state Franchise Tax Board, which will have move information on its website starting Friday. And the buyer must occupy the home or condo as their principal residence at least two years after the initial sale. Condo conversions do not qualify, but move-up buyers do.

Obviously, state builders hope this will give a shot in the arm to the home-building industry. Housing starts dropped 68% since 2005 when 208,000 new homes -- the high water mark -- were built to about 66,000 in 2008 -- the lowest number since 1954.

‘What we’ve been missing in the market place for the last couple years are people, ‘ said Tim Coyle, senior vice president of government affairs at California Building Industry Assn.

Note: The rules are different from the $8,000 tax break in the federal stimulus plan, but under certain circumstances buyers will qualify for both. Under the Fed plan, buyer income is limited to $75,000 for singles or $150,000 for couples and the house (new or existing) must be owner-occupied for three years. So first-time buyers making less than those amounts who live in their new homes for three years may qualify for both. That’s $18,000 in tax credits.

-- Lauren Beale

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