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New Home Tax Credit: Party On, Guinea Pigs

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Legislators want to expand California's $10,000 tax-credit program which gives homeowners a credit if they buy a new construction home, be it a house, condo or other type of residence (a move intended to clear out the supply of new homes), reports the Wall Street Journal. The program is essentially going to run out of available funds, so politicians want to both extend the funds to $200 million and extend the timeframe of the program. (This incentive is different than the federal $8,000 tax credit available to first-time buyers.) While the paper notes that "tax-credit program appears to have had little immediate impact on new-home sales," experts believe that the credit will help push more first-time home buyers into the market. More about the program can be found at the State of California's Franchise Tax Board site. Economists will watch how buyers react to the credit--"The rapid response from home buyers in applying for the tax credit could serve as a instructive measure for other states to follow"--a move which affirms that everyone is looking California as a sort of guinea pig in terms of recovering from the real estate crash (the state was among those hit first and hardest). Sugar water for dinner, everyone! [WSJ]