As you might remember, the first-time homebuyer tax credit was one of the key promises of Joe Biden’s campaign. Eventually, he kind of kept his promise and lawmakers in the United States introduced the First-Time Homebuyer Act of 2021 on April 28, 2021. According to this new bill, first-time homebuyers can benefit from a $15,000 grant as refundable federal tax credits.
This new bill will help the United States residents, who have low or middle income, to purchase their very first home. However, as of May 2024, the bill has not been passed into law yet. This means that although there is a promise and regulation, homebuyers cannot benefit from this opportunity yet. First, you need to wait for the bill to be passed into law.
First Time Home Buyer Tax Credits
The first-time homebuyer tax credit is one of the campaign promises of Joe Biden and it offers a $15,000 federal tax credit to those who will purchase a home for the very first time and also, meet the requirements. This tax credit can provide a bit of convenience for many renters who are planning to buy a home for themselves and their families.
If you would like to benefit from this tax credit, then you need to meet the following requirements to be eligible for it:
- You need to be a first-time homebuyer
- You should not own any home in the last three years
- Depending on your area, you should not exceed the income limitations
- The house you are going to buy must be your primary residence. No rental properties or second homes are accepted.
- You need to be at least 18 years old, or your spouse must be at least 18 years old
- You must purchase the home from a non-kin seller.
How Does First Time Home Buyer Tax Credit Work?
First of all, it is worth noting that a first-time homebuyer tax credit is not a loan that you are going to repay. In addition to this, it is not a cash grant as well. It is a tax credit that is provided to you according to the 10% of the price of the house you are going to buy, and it cannot exceed $15,000 in 2024.
It is indexed to the inflation rate and every year, the maximum tax credit amount will increase accordingly. If you may receive this tax credit after it is passed into law, it is going to be applied to your tax bill or refund. If you have a spouse, you both can claim half of the available tax credit.
When Can You Benefit from $15,000 Tax Credit?
Unfortunately, since it is still a bill, you cannot benefit from this opportunity yet. However, if it will be passed into law and you meet the above-mentioned requirements, all you will need to do is file a tax form. There are no additional actions you need to take to benefit from this opportunity.
In case the seller of the house may have a tax bill of less than $15,000, the exceeding amount will be delivered to them with direct deposit. According to the current bill, this program applies to all houses bought as of January 1, 2024. Since there is no end date specified in the bill, all your future purchases will also be eligible for this opportunity as long as you meet the requirements.