BILL ANALYSIS
AB 183
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 183 (Cabellero)
As Amended March 18, 2010
Majority vote
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|ASSEMBLY: | |(May 4, 2009) |SENATE: |29-1 |(March 22, |
| | | | | |2010) |
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(vote not relevant)
Original Committee Reference: RLS.
SUMMARY : Provides a tax credit against the personal income tax
liability of taxpayers who are first time homebuyers or
taxpayers who purchase a home that has never been occupied.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Provide a credit of not to exceed the lesser of $10,000 or 5%
of the purchase price of a "qualified principal residence,"
defined as a single-family residence purchased by a first-time
homebuyer or one that has not been previously occupied:
a) A first-time homebuyer is a taxpayer who has had no
ownership interest in a principal residence in the
preceding three-year period.
b) A new home is a home which has not been previously
occupied. The credit must be applied by the taxpayer in
equal amounts over three successive taxable years.
2)Limit the amount of the aggregate credit for first-time
homebuyers to $100 million and for new homes to $100 million,
for a total of $200 million in allocated credits. To account
for the incomplete utilization of the credit by many
taxpayers, the Franchise Tax Board (FTB) is to reduce the
allocation amount for new homes by 70% of the value of the
credit and reduce the allocation amount for first-time
homebuyers by 57% of the value of the credit.
3)Provide a credit for purchases of qualified homes between May
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1, 2010 and December 31, 2010. Also provide a credit for
purchases of qualified homes after December 31, 2010 and
before August 1, 2011, pursuant to an enforceable contract
executed prior to December 31, 2010.
4)Allow a taxpayer to reserve a credit prior to the close of
escrow for the purchase of a new home if the taxpayer and
seller joint sign and submit to the FTB a certification
stating that they entered into an enforceable purchase
contract on or after May 1, 2010 and on or before December 31,
2010.
5)Establish that: a) the credit is available for only one
qualified principal residence for each taxpayer; b) the home
must be occupied for at least two years immediately following
its purchase or the credit amount used will be "recaptured" in
subsequent tax years; and, c) the credit is available on a
first-come, first-served basis.
6)Require taxpayers to submit to the FTB a properly executed
settlement statement and a certification from the seller that
the home has not been previously occupied or a certification
from the taxpayer that he or she is a first-time homebuyer.
7)Restrict the credit to taxpayers who did not receive a credit
under the previous home purchase credit pursuant to SB 15 X2
(Ashburn), Chapter 11, Statutes of 2009-10, Second
Extraordinary Session. Also exclude persons under the age of
18, individuals claimed as dependents by another taxpayer and,
taxpayers who are related to the seller.
8)Mandate the FTB to establish a wait list of taxpayers based on
the date that a certification or reservation was received once
the tax credit for new homes has been exhausted. The FTB is
to notify these taxpayers as to the availability of any
remaining credit before December 31, 2011.
AS PASSED BY THE ASSEMBLY , this bill constituted intent language
for the 2009 Budget.
FISCAL EFFECT : According to the FTB, revenue losses to the
General Fund as a result of the application of tax credits will
total $200 million as specified under the bill. This will be
distributed across fiscal years based on the following schedule:
$6 million in 2009-10; $69 million in 2010-11; $67 million in
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2011-12; $54 million in 2012-13; and, $4 million in 2013-14.
COMMENTS : The bill appears to represent a blending of policy
goals, including: increasing demand for housing by lowering the
effective purchase price; decreasing the existing market
inventory of homes; and, encouraging construction of new homes.
Supporters claim this bill will result in the generation of
additional jobs in California. No formal jobs analysis has been
conducted.
Homeownership benefits from substantial preferential tax
treatment under state and federal law. Tax preferences that
encourage homeownership include: deductibility from income of
mortgage interest on first and second homes for state and
federal purposes; deductibility from income of property taxes
for state and federal tax purposes; exclusion from income of
certain capital gains on the sale of a home for state and
federal tax purposes. Homeownership is also encouraged by the
non-taxability of the housing services that are received by the
owner as well as recent federal tax credits made available as
part of the economic stimulus package.
Analysis prepared by: Mark Ibele / BUDGET / (916) 319-2619
FN: 0003776