California has re-established and extended a $10,000 home buyer tax credit, allocating $200 million to the credit for homes purchased between May 1 and Dec. 31, and between Dec. 31 and Aug. 1, 2011.

Steve Goddard, president of the California Association of REALTORS®, said the tax credit will help create incentive for first-time home buyers to purchase abandoned and foreclosed homes. It is these homes that will require substantial rehabilitation by the new owners, which will in turn generate a tremendous increase in jobs and accessory purchases connected to home improvement activities, Goddard said.

The credit will be split between first-time buyers and buyers who have lived in their home for at least two years.

The tax credit will help push prospective buyers off the fence, clear out inventory, and jump-start the homebuilding industry, which will help create jobs and reinvigorate the state's economy, said Liz Snow, CEO and president of the California Building Industry Association, in a statement.