House prices are soaring, creating homeownership barriers for low- and middle-income Americans. new legislation dubbed the “First Time Homebuyer Act” was recently introduced to combat the affordability crisis. The bill aims to incentivize first time homebuyers, particularly those in marginalized communities, to purchase homes. If passed, the legislation would provide a tax credit of up to 10% of the purchase price of a home, or $15,000.00.
The eligibility requirements are as follows:
Potential buyers must not have owned or purchased a home within the past three years. This means that the buyers need not be true first time homebuyers, but rather, “haven’t-purchased-in-a-while homebuyers.”
Participants must also make no more than 160% of the area median income, and the home’s purchase price must be no more than 110% of the area median purchase price.
The home must be used as a primary residence for at least four years, or borrowers will face taxes to recover a portion of the credit.
The borrower’s primary residence must have been purchased after December 31, 2020 to qualify.
This tax credit isn’t the first of its kind. In 2008,1.5 million homebuyers took advantage of a $7,500 first-time homebuyer tax credit that was part of the 2008 Housing and Economic Recovery Act. In 2009, the credit increased to $8,000. As in 2008-09, the hope is that this credit would build wealth within communities that are systemically excluded from the housing market.