BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 15 X2
                                                                  Page  1


          (  Without Reference to File  )

          SENATE THIRD READING
          SB 15 X2 (Ashburn)
          As Amended  February 15, 2009
          Majority vote. Tax levy

           SENATE VOTE  : Vote not relevant  
           
           SUMMARY  :  Establishes a personal income tax credit for  
          purchasers of a qualifying principal residence. Specifically,  
           this bill  :

          1)Establishes a tax credit of the lesser of $10,000 or 5% of the  
            purchase price for the purchase of a principal residence that  
            has never been occupied.

             a)   The purchase of a qualifying principal residence must be  
               made on or after March 1, 2009 and before March 1, 2010.

             b)   The credit will be provided in equal amounts ($3,333 for  
               the $10,000 credit) over the three successive taxable years  
               beginning with the year in which the purchase is made.

             c)   Qualifying residences must never have been occupied and  
               must be eligible, after purchase, for the Homeowner's  
               Property Tax Exemption.

             d)   The taxpayer must live in the home as their principal  
               residence for at least two years or be subject to liability  
               for any tax credits received.

             e)   Sellers must certify that the residence has never been  
               occupied and provide that certification to the Franchise  
               Tax Board (FTB) in order to reserve a credit for the  
               purchaser.

          2)Limits the total amount of credits that may be claimed under  
            this bill to $100 million.  Credit reservations will be  
            allowed on a first come first served basis (based on the date  
            of that the FTB receives each certification).  The FTB will be  
            responsible for keeping a running tally of the certifications  
            received and will disallow the reservation and subsequent use  
            of any credit after the amount reserved reaches $100 million  








                                                                  SB 15 X2
                                                                  Page  2


            (10,000 credits).

          3)Authorizes the FTB to prescribe rules, guidelines or  
            procedures to implement this program and exempts adoption of  
            those rules, guidelines or procedures from the Administrative  
            Procedures Act.

          4)Includes a repeal on December 1, 2013.

          5)Takes effect immediately as a tax levy.

           FISCAL EFFECT  : General Fund revenue loss totaling up to $100  
          million, spread more or less equally over fiscal years 2009-10,  
          2010-11, and 2011-12, but probably somewhat less than this  
          maximum because some qualifying taxpayers may not have enough  
          tax liability to fully utilize their credits each year (the  
          credits are not subject to carry-forward and are not  
          refundable).

           COMMENTS  :  The intended purpose of this measure is to provide an  
          incentive for the purchase of builders' unsold stock of new  
          homes. Given the magnitude of unsold home inventory in  
          California, it is likely that the full $100 million would be  
          reserved before the end of 2009, perhaps in the first few months  
          of availability.


           Analysis Prepared by  :   Daniel Rabovsky / BUDGET / (916)  
          319-2099




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