What You Need to Know About the New Homeowner’s Tax Credit
Depending on the day, it probably seems like there are a million new laws being passed, bills being introduced, and initiatives being started — and, often, they don’t seem to have anything to do with you.
Sound about right?
It’s the way of the government, and, as high school history class taught most of it, just because an idea is brought to the table doesn’t mean anything will come of it. However, the new proposed homebuyer tax credit — if passed — could have a big impact on many first time homebuyers across the country. Here’s what you need to know.
What is the homebuyer tax credit?
President Joe Biden proposed a first-time homebuyer tax credit of $15,000, and it was brought to Congress by Rep. Earl Bluemenauer (D-OR) and Rep. Jimmy Panetta (D-CA). The proposed tax credit would offer $15,000, or up to 10% of a home’s purchase price, to first time homebuyers.
The idea came to fruition as part of Biden’s campaign and platform promises, and would benefit low-income, first-time homebuyers. In a particularly expensive home buying market, the idea behind the credit is to encourage more people to consider buying a home.
Who would be eligible for the credit?
The proposed tax credit would be eligible to:
- Low- and median-income buyers
- Those who make less than 160% of their area’s median income
- Those who have not purchased a home in the last three years
In order to use the tax credit, those eligible:
- Cannot purchase homes more than with purchase prices of 110% or over the median area home price
- Must intend to use the home as a primary residence for > 4 years (or pay tax penalties)
What else is there to know?
The tax credit, if passed, would build on a similar tax credit passed under the Obama administration — and its goal, while to increase homeownership, is also to help diminish inequity in the home buying process. A down payment assistance program, while separate from this tax credit, is also moving through Congress — and, if passed, could provide up to $25,000 in assistance for down payments in similar circumstances.
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