The $15k First-Time Homebuyer Tax Credit: Explained
To incentivize the housing market and make homeownership more affordable, the Biden administration proposed the introduction of the $15,000 homebuyer tax credit on 28 April 2021. Programmed to mitigate the initial cost of purchasing a home, this tax credit offers financial relief for those seeking to purchase their own homes. With the bill still being passed into law, you might be wondering why this bill is important to you. In this article, we will take you through the scope of the $15K homebuyer tax credit and what you should know about the actual proposals for the bill.
What is the $15K Homebuyer Tax Credit?
The $15k homebuyer tax credit is a government program to incentivize house ownership for low-income and moderate-income earning Americans. Under Biden's regime, this initiative is intended to promote financial relief for first-time homebuyers in these times of high rent prices.
Additionally, it is meant to promote the living standards of the people, especially the community of color suffering from the housing crisis. Nevertheless, It plays a greater role in mitigating the initial expenses of purchasing a new home.
How to Use the $15K Homebuyer Tax Credit
If Congress passes the bill, the $15K homebuyer tax credit will not apply to all first-time home buyers. Eligibility provisions to be met by first-time home buyers are stipulated by this bill. First and foremost, you should be a first-time buyer who has not owned a house or cosigned a mortgage for the last three years. To be a beneficiary of the program, you should be 18 years old.
In addition, the $15K homebuyer tax credit does not apply to any buyer who wants to purchase a home from a close relative like a brother, sister, aunt, cousin, or grandparents. Furthermore, your income should not exceed the median income as per your location. Nevertheless, the home you intend to buy has to be a primary residence. Once eligibility requirements are met, you can proceed with the home-buying process. It is worth noting that this bill is essential as it tends to solve the homeownership crisis. For instance, it is focused on eliminating the hurdles that affect the housing market, like down payment costs. The tax credit would provide you with immediate funds to be used as the down payment or the closing fees for the home purchase.
This bill, when passed, would function as a credit against the tax liability when filing your tax return. In simple terms, the tax credit directly reduces your actual tax bill. To claim the tax credit, eligible purchasers have to include the necessary documentation and follow the procedures stipulated by the tax authorities. This involves filling out the right documents and providing supporting documents. However, during this process, with the help of tax professional agents, you will be guided throughout this process to guarantee compliance with all the requirements and regulations.
After you acquire the house, it is important to note that the tax credit is not paid back unless you sell your house within the first four years of ownership.
What Else to Know About the $15K Homebuyer Tax Credit
While Biden’s $15K homebuyer tax credit stands out as a great opportunity for first-time home buyers, it's essential to consider these additional frameworks related to the $15K homebuyer tax credit bill proposal. There are some restrictions and limitations associated with this tax credit. These limitations involve income thresholds and residency requirements. For instance, if your income is more than 60% of the median income of your location, you cannot qualify as a beneficiary of this program.
In addition to the $15K homebuyer tax credit, there are other current housing programs that aid in fighting the expenses in the housing market. These programs are categorized into tax deductions and tax credit programs. In the meantime, before the bill is passed, buyers should take advantage of these programs. For example, mortgage interest and property tax payments programs help to cut down the initial cost when purchasing a home.
Moreover, you can take advantage of government-backed FHA or VA loans as they aid in down payment expenses. Furthermore, you can consider mortgage credit certificate programs as they serve in lowering tax bills. Considering these approaches to homeownership will promote you in making financial planning decisions toward the home purchase.
In conclusion, with generally rising rent prices, the $15K homebuyer tax credit is promising and provides a great opportunity for Americans toward homeownership. For instance, down payment cost is the greatest challenge for homebuyers. With this bill, there would be immediate relief in this issue. While observing the eligibility requirements and approaching the process with diligence and comprehensive financial planning, you can maximize the benefits of Biden’s $15K homebuyer tax credit.