California Passes First-Time Homebuyer Tax Credit
The federal government may have ended its first-time homebuyer tax credit program, but California is still charging ahead with its own first-time homebuyer tax credit.
The housing bubble is perhaps the single biggest crumbling brick that started the collapse of the financial system known as the Great Recession. Since it occurred, various government entities have done all they can to fill empty homes and get construction moving again.
Perhaps the best known strategy for propping up real estate has been the first-time homebuyers' tax credit. The federal government $8,000 credit definitely stabilized things even if it didn't create a turn around. That program, however, ended March 31, 2010. There has been little immediate impact, but many economists are seeing signs indicating the housing market may collapse again although not as dramatically as the first bubble burst.
This is a disaster for a state like California. The state has a massive 12.5 percent unemployment rate as of May 2010. A sizeable chunk of this is attributed to the construction industry, which has been slapped upside the head like a snitch in a mafia movie. The state can't afford the real estate market to take another hit. It really needs it bloom to generate jobs and more tax revenues.
Facing disaster, California has passed a first-time homebuyer tax credit. The credit is equal to five percent of the cost of the purchase or $10,000, whichever is greater. This is actually more than the tax credit the feds allowed. It is also good for the remainder of the 2010 calendar year.
Will this tax credit keep the California real estate market from collapsing again? Nobody really knows, but it certainly is a step in the right direction.