Taxes: What is the first-time homebuyer tax credit?

• 45% of homeowners are first-time buyers. 
• A 2021 bill proposes up to $15k in tax credits for first-time homebuyers.
• Find more about the first-time homebuyer tax credit.

Do you know about the first-time homebuyer tax credit? Find out what it is! In the United States, more and more people are deciding to buy their first home, be it a house, an apartment or a condo.

In fact, approximately 45% of homeowners are first-time buyers, according to a 2022 Zillow survey. To offset the costs involved in purchasing a home, the federal government has proposed a bill allowing taxpayers to claim up to $15,000 in tax credits. Learn more!

First-time homebuyer tax credit: What is it?

The first-time homebuyer tax credit was first introduced in April 2012, when US lawmakers presented a bill to grant credits of up to $15,000 in refundable tax credits for new homeowners.

This was proposed to help marginalized communities have the opportunity to increase their assets and make access to housing a reality for those who, until now, only have the opportunity to rent a property to live with their families. .

Which are the requirements?

Who would qualify for a first-time homebuyer tax credit? According to the US Internal Revenue Service, a taxpayer is considered a first-time homebuyer when they have not owned a primary home in at least three years.

However, some taxpayers who have owned a property in the last three years can claim the credit, as long as they meet requirements such as: being a single parent who owned a property together with a spouse from whom they have separated; being an adult who has left the workforce for several years due to a caregiving role; owning a mobile home, or owning a home that has not passed safety tests for damages whose cost to repair exceeds the full value of the home.

First-time homebuyer tax credit features

One of the advantages of this tax credit is that if you have an individual retirement account or a 401(k) plan, you will be able to withdraw money to make the payments on your first home without incurring any type of penalty.

In 2021, Congress proposed a bill to provide up to $15,000 of credits to taxpayers who buy a home for the first time. Although this credit is not yet available, there are grants for first-time buyers.

Considerations

The first-time homebuyers tax credit is till just a bill which means that it could take some time to materialize. If it is passed into law, all taxpayers who purchase a home, mobile home, or manufactured home for the first time will be eligible to claim it.

Another aspect to consider is that the credit will also apply to taxpayers who buy a house with two, three or four units and who allocate one of them for their main home, even if the other units are for rent.