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AB 1714

Personal income tax: credit: first-time homebuyer program: required repairs.

2025-2026 Regular Session Introduced by David Tangipa

California offers a temporary tax credit equal to 40% of seller-paid repairs required to close a first-time homebuyer sale, up to $25,000 per year.

In committee: Set, second hearing. Referred to REV. & TAX. suspense file.
#personalincometax #credit #first-timehomebuyerprogram #requiredrepairs
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WeVote Research Nonpartisan
Bill Summary · AB 1714

Summary of AB 1714 (2025-2026) — California: Personal income tax credit for first-time homebuyer program: required repairs

Overview

  • Jurisdiction: California
  • Bill number: AB 1714
  • Session: 2025–2026
  • Chief purpose: Create a temporary personal income tax credit to offset certain repairs required as a condition of closing a real estate transaction under a first-time homebuyer assistance program.

Main purpose and intent

  • To encourage homeownership by reducing the burden of required repairs for properties purchased with first-time homebuyer assistance.
  • The credit aims to lower the likelihood of failed transactions by offsetting repair costs that are mandatory to qualify for financing or to close a sale.

Key provisions and changes

  1. Tax credit established

    • A new credit under the Personal Income Tax Law (Revenue and Taxation Code) added by Section 17053.45.
    • Eligible for taxable years beginning on or after January 1, 2028, and before January 1, 2033.
    • Credit amount: 40% of qualified repair expenses, up to a maximum credit of $25,000 per taxable year.
    • The credit is against the taxpayer’s “net tax” (as defined in §17039).

  2. Definitions and scope

    • “First-time homebuyer assistance program” is defined as programs under Health and Safety Code Part 3 (Chapters 11 and 12) administered by CalHFA.
    • “Qualified repair expenses” are:
      • Repairs paid or incurred by the seller that are required as a condition of closing the sale to a purchaser utilizing a first-time homebuyer program.
      • Specifically includes repairs identified by lender appraisal, lender-required property inspection, or health/safety requirements tied to the financing program.
    • Excludes cosmetic improvements and any remodeling, landscaping, or aesthetic upgrades not required as a financing condition.

  3. Eligibility and verification

    • To claim the credit, a taxpayer must substantiate:
      • Repairs were required as a closing condition.
      • Repairs were completed prior to or as part of the sale.
      • Purchaser used a CalHFA-administered first-time homebuyer program.
    • Only one credit may be claimed per taxable year per property (no multiple claims by different taxpayers for the same property).
    • If multiple taxpayers own the property, only one may claim the credit in the year the expenses are incurred.

  4. Credit handling and carryover

    • If the credit exceeds the taxpayer’s net tax for the year, the excess may be carried forward to future years (up to five years) to reduce net tax.

  5. Policy intent and reporting

    • The Legislature finds the credit’s purpose includes reducing failed transactions and expanding access to homeownership by offsetting repair costs for older homes and first-time buyers.
    • Performance indicators: number of returns claiming the credit and total amount of credits claimed.
    • The Franchise Tax Board (FTB) must analyze performance indicators and report to the Legislature on or before December 1, 2033 (and 2034 per drafting), in compliance with Government Code reporting requirements.
    • Disclosure provisions are treated as an exception to certain standard reporting rules.
    • The credit provides a temporary program and is repealed automatically on December 1, 2033, unless extended or reenacted.

  6. Effective date and levy status

    • The act is a tax levy and takes immediate effect upon enactment for purposes of the levy provision.

Who would be affected

  • Taxpayers who are purchasing real property using a California first-time homebuyer assistance program administered by CalHFA.
  • Sellers of such properties, insofar as qualifying repair costs are paid by the seller and charged as part of closing.
  • CalHFA and lenders involved in first-time homebuyer financing, as repairs identified by lender appraisals, inspections, or mandated health/safety requirements are treated as qualified repair expenses.
  • Franchise Tax Board, which would administer substantiation requirements and collect performance data for annual reporting.

Procedural and timeline details

  • Eligibility window: Taxable years 2028 through 2032 (inclusive) — credits claimed in those years.
  • sunsets: The credit is set to repeal after December 1, 2033, unless extended.
  • Reporting: FTB to report annual performance data to the Legislature, with data collection aligned to government reporting standards.
  • Immediate effect: The bill specifies it takes immediate effect as a tax levy.

Notes for readers

  • The credit is relatively targeted: it covers only repairs required by financing conditions, not cosmetic or voluntary improvements.
  • The maximum annual credit is $25,000, and the credit rate is 40% of qualified repair expenses.
  • The program would need robust substantiation documentation to qualify for the credit.

If you’d like, I can provide a one-page plain-English briefing for a non-technical audience or a side-by-side comparison with existing first-time homebuyer programs.

Compiled from official sources — confirm details with the bill’s official record.

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