First-Time Homebuyer Tax Credit

Summary#

This bill creates a new refundable tax credit for first-time buyers of a principal residence in the United States. The credit equals 10% of the home's purchase price, subject to a maximum of $15,000 (or $7,500 for married individuals filing separate returns). A person is a first-time homebuyer if they (and a spouse, if married) have not owned a residence in the 3 years before the purchase and have not claimed this credit before. The credit is reduced for higher incomes based on area median income (AMI) and is also reduced if the purchase price is above local median levels. The purchase must be financed with a federally backed mortgage loan. The credit can be transferred to the mortgage lender at the time of purchase if the lender registers and follows rules in the bill. The bill requires attaching the settlement statement to the tax return and includes reporting and recapture rules if the home is sold or stops being the primary residence during a 4-year recapture period. The Secretary of the Treasury must work with HUD on AMI and price measures and set up an advance payment program to lenders. The changes apply to residences purchased after the bill becomes law.

What it means for you#

• If you are a first-time buyer who meets the definition in the bill, you may be eligible for a refundable credit equal to 10% of your home's purchase price up to the stated limit.
• The credit may be reduced or phased out based on your modified adjusted gross income measured against the area median income for your area and household size.
• If the home's purchase price is higher than local medians, the credit is reduced under a purchase-price phaseout.
• You must be at least 18 years old and use a federally backed mortgage to qualify. A home you build counts as a purchase when you first occupy it.
• You must attach a properly executed settlement statement to your tax return to claim the credit.
• You can choose to let the mortgage lender receive the credit instead of claiming it on your return; the lender would provide you with the credit amount at closing.
• If you sell or stop using the home as your main residence during the 4-year recapture period, you may owe part of the credit back through an increase in tax, subject to listed exceptions (for example, death, certain involuntary conversions, transfers between spouses, and qualifying service or employment moves).

Expenses#

No publicly available information on the bill's budgetary cost or fiscal estimates is included in the bill text or metadata. The bill does create an advance-payment program for lenders, but it does not include a cost estimate.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.