California’s new state budget, signed by Gov. Arnold Schwarzenegger Feb 20, includes a $10,000 tax credit or 5 percent of the purchase price (whichever is less) of newly built homes. Californians who use the new homes as their principal residence can use the credit to offset their state income tax over three successive tax years.

The state tax credit applies to new homes sold between March 1, 2009, and March 1010, or whenever the funding (capped at $100 million) is exhausted.

The tax credit can be combined with the new federal tax credit of $8,000 for first-time home buyers.

As it’s been reported, California’s revenues have plummeted this year, due in part to the state’s deteriorating home-building industry. The new tax credit, Home Channel News says, is part of a $41 billion budget that contains steep spending cuts to education and social services and increased sales and payroll taxes.

Source: Home Channel News