With the upward trend of housing market sales continuing and housing prices nationwide looking like a bubble, first-time home buyers find it challenging to fulfill their goal of buying into the housing market.
On 28 April 2021, U.S. legislators introduced the First-Time Homebuyer Act of 2021. The bill amends the IRS tax code to provide up to $15,000 in refundable federal tax credits for first-time homebuyers.
The First Time Homebuyer Act, if approved, would create a federal tax credit of up to $15,000, equal to 10% of the amount first-time buyers paid for their primary residence.
The tax credit is refundable, implying that if it reduces a buyer’s federal income tax liability to zero, the buyer may receive a refund for any unused portion of the credit.
The First-Time Homebuyer Tax Credit is part of the First-Time Homebuyer Act of 2021 and provides first-time homebuyers who meet specific criteria with a $15,000 tax credit.
It fulfills one of President Biden’s key campaign pledges – to make homeownership more accessible to the millions of renters who aim it for themselves and their family members. For homebuyers to avail of this credit, the criteria required are:
1) The First-Time Home Buyer Act: How Does It Work?
The $15,000 First-Time Homebuyer Tax Credit of 2021 is not a grant in cash nor a returnable loan.The tax credit is equal to 10% of the cost of the home and does not exceed $15,000 in 2021 inflation-adjusted dollars.