Proposed $15,000 First Time Homebuyer Tax Credit
The proposed $15,000 first time home buyer tax credit made available through the First Time Homebuyer Act is now officially a bill, heading to Congress.
Under the current verbiage of the bill, this First Time Homebuyer Tax Credit will be available to taxpayers for the lower of 10% of the purchase price of the home, or $15,000. The home purchased must be the taxpayer’s primary residence and must be occupied for 4 years. If the home is sold within the 4 year period, a portion of the credit will need to be repaid.
In addition, in order to be eligible for the $15,000 credit, the taxpayer needs to be a first time homebuyer, or have not owned a home in the last 3 years. The home being purchased can not be more than 110% of the median purchase price in the area and the bill’s current version applies to homes purchased after December 31, 2020.
Under the current verbiage, this tax credit is mostly available to low to middle income earners with the qualification that their Modified Adjusted Gross Income cannot be more than 160% of the area median income (AMI). To look up the area median income you can use https://ami-lookup-tool.fanniemae.com/amilookuptool/
In addition, a draft of The Downpayment For Equity Act of 2021 offers a $25,000 grant for first time homebuyers as well. This grant includes requirements that the taxpayer is a first time homebuyer, first generation homebuyer, and other strict income requirements such as Modified Adjusted Gross Income cannot be more than 110% of the area median income (as opposed to 160% for the Credit).
Stay tuned as we await whether President Biden will pass both bills offering qualified first time homebuyers the opportunity to alleviate some of the pressure of purchasing their first home.