Long gone is the Federal Tax Credit for 1st Time buyers; which expired last year. HOWEVER; the District of Columbia still offers a $5,000 tax credit to anyone who has not owned a main home in the District during the one-year period ending on the date of purchase.
At the end of last year, Congress renewed the $5,000 DC home-buyer tax credit for another 2 years. The DC tax incentive will be retroactive for 2010 and continue through 2011. It has been extended many times since it started in 1997 and of course the hope is that this will continue…
An individual who makes less than $90,000 is eligible for at least some of the tax credit. If married and filing jointly, the ceiling increases to $130,000.
1) Who is eligible for the DC Tax Credit?
Unlike the last years’ Federal Tax Credit, the DC Tax Credit only requires that you be a DC First-time Homebuyer. Even if you own a property in another state, you may be eligible for the DC Tax Credit.
2) Who Can Claim the Tax Credit?
• If you purchased a main home during the tax year in the District of Columbia; and
• If you (and your spouse if married) did not own any other main home in the District of Columbia during the 1-year period ending on the date of purchase.
Generally, the DC Tax Credit can be claimed in the year that the principal residence has been purchased as long as the purchaser(s) did not own another principal residence in the District of Columbia during the one year period ending on the date of purchase.
It can be a single family house, houseboat, house trailer, cooperative apartment, condominium, etc.
However, you may not claim the credit if any of the following apply:
• You acquired your home from certain related persons or by gift or inheritance. For details, see section 1400C(e)(2).
• Your modified adjusted gross income (see the instructions for line 2) is $90,000 or more if single, married filing separately, head of household, or qualifying widow(er); or $130,000 or more if married filing jointly.
• You previously claimed this credit for a different home.
3) How much is the credit for?
The maximum credit is for $5,000, or $2,500 if married filing separately. The credit begins to phase out when the modified adjusted gross income exceeds $70,000 ($110,000 if married filing jointly) and ends at $90,000 ($130,000 if married filing jointly).
4) Are there any exclusions?
if you purchased your home from related persons or by gift or inheritance. Related persons include, among others, grandparents, parents, spouses, children and grandchildren. Also, the DC Tax Credit can only be claimed once, so it is not available if already claimed on another property.
5) Where can I get more information?
More information can be obtained from the IRS website or by reviewing the IRS Form #8859.
Note: As always; this is not tax advise; but for informational purposes only. Always consult your tax preparer or accountant.