In February 2019, Assemblywoman Blanca E. Rubio (D-Baldwin Park) introduced AB 1590, which creates a targeted tax credit for some first-time homebuyers to help raise homeownership rates in disadvantaged communities. AB 1590 is currently pending in the California Senate and comes on the heels of a growing affordable housing crisis in California.
This bill aims to combat the affordable housing crisis by assisting low- and moderate-income households to purchase their first homes in disadvantaged communities. It achieves this by offering qualified first-time homebuyers a tax credit for the lesser amount of:
- 3% of the purchase price; or
To qualify, a homebuyer needs to:
- be a first-time homebuyer;
- earn no more than 120% of the median income for their area;
- purchase a home in a state-designated disadvantaged community; and
- purchase the home as their principal residence
between January 1, 2020 and January 1, 2023.
Communities are designated as disadvantaged by the state based on geographic, socioeconomic, public health and environmental hazard criteria, including areas with concentrations of low-income residents.
Rubio’s office estimates the $50 million AB 1590 allocates could help 10,000 households.
AB 1590 passed in the Assembly and is awaiting assignment with the California Senate Rules Committee. Read the bill text here.
Although it would assist some first-time homebuyers, the bill’s impact will be limited because it does not address the state’s larger issue: a lack of low- and moderate-income housing inventory.
This bill makes some existing housing easier to acquire, but existing housing is inadequate. California faces a dire shortage of low- and moderate-income housing.
For those homebuyers lucky enough to find an affordable home in the first place, this bill offers precious breathing room for unexpected expenses like repairs.
For the rest of California households suffocating amid the state’s affordable housing crisis, this bill is a small but welcome step toward making home ownership accessible for low- and moderate-income families.
Follow the link to see more recent California legislation aimed at alleviating the state’s affordable housing crisis.