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What You Need to Know About the $15k First-Time Homebuyer Tax Credit

Here’s what you need to know about the $15k first-time homebuyer tax credit

The topics of home affordability and gentrification are like landmines for politicians and real estate professionals alike. Most, or at least some of them, care about the problem or know they must appear to do so. Naturally, those with the greatest ability to do something about this nationwide crisis are also the ones with the most to lose. Or at least their pocketbooks do. Caught in the crosshairs of skyrocketing home prices, the most are first-time buyers. So how do we break this vicious circle? Say hello (again) to the $15k first-time homebuyer tax credit… here’s what you need to know.

No matter what the color of your lawn sign, we all can agree that any good news out of Washington, D.C. is a beautiful thing. Therefore, the re-establishment of the first-time homebuyer credit is such big news. Having expired 10 years ago, the leg up it gives young homebuyers would make the Rockettes jealous. And if you’re too young to get that reference, go to Radio City Music Hall in N.Y. Don’t worry, I’ll wait here.

The credit is quite simple, targeting low-and middle-income earners who must not have owned or purchased a home within the past three years. They must make no more than 160 percent of the area median income and the home purchase price must not be more than 110 percent of the area median purchase price. Pretty straightforward so far, right?

So, what does signing up for the program do besides making your tax returns more confusing to fill out? Let’s say you owe $20,000 in income tax; this credit lowers that bill to $5,000. Yes, you read that right. This credit isn’t a deduction that reduces your taxable income like working out of your home does. It is a credit that lowers the actual check you write. Think of it as a gift card from Uncle Sam, just for buying your first house. That zillion-inch TV you’ve been coveting at Costco is looking a lot more likely, isn’t it?

Best of all, one doesn’t need to pay back today’s credit, whereas, in the original program, it did. It can also increase your tax refund if that’s how you roll. With home prices escalating at a rate of over 12 percent per year, this financial instrument can improve affordability for those who need it the most. And isn’t it time someone sent you some more “dough rei me” than you’re giving out?

We at The Rueth Team are committed to partnering with you on your homeownership journey. For more resources and guides, check out our first-time homebuyer page and call us at 303.214.6393 with any questions.

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