State Offers Home-Buying Credit

The state Franchise Tax Board is offering guidance on applications for the new home/first-time buyer state tax credit, cautioning taxpayers to work closely with their escrow companies, carefully follow instructions on the credit forms and to send in their applications timely to avoid being denied the credit.

Assembly Bill 183 provides $200 million ($100 million for new homes and $100 million for first-time buyers) of tax credits to those who purchase a qualified principal residence between May 1 and Dec. 31.

The purchase date is the date escrow closes. The credit can total $10,000 by reducing one’s state taxes by up to $3,333 per year for the next three years. Taxpayers may apply for the tax credit if they have entered into a sales contract before May 1, as long as escrow closes on or after May 1.