WASHINGTON, D.C. – (RealEstateRama) — On July 13, Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced the First-Time Homebuyer Credit Act of 2016, S. 3175, which would provide a refundable tax credit for first-time home buyers, subject to the purchase price and income limits described below.
Under the bill, first-time home buyers would receive up to $10,000 in a refundable tax credit, equal to 2.5 percent of the purchase price for homes purchased for less than $600,000. Homes purchased for $600,000 – $700,000 would be eligible for a smaller credit determined by reducing the maximum credit by how much the purchase price exceeds $600,000. For example, a home purchased for $650,000 would be eligible for a $5,000 tax credit. Homes purchased for more than $700,000 are not eligible for the credit.
The credit would be available to first-time home buyers who are over the age of 18 and would phase out for individuals with annual incomes exceeding $80,000 and married couples exceeding $160,000. Individuals whose incomes are between $80,000 and $100,000 and married couples between $160,000 and $180,000 would be eligible for a smaller credit determined by reducing the maximum credit by how much their incomes exceed the corresponding limits. For example, an individual with an income of $90,000 would be eligible for half of the credit they would have received if their income was $80,000 or less. Individuals whose income exceeds $100,000 and married couples with a combined income over $180,000 are not eligible for the credit. The credit reductions based on home purchase price are applied before the income limit reductions.
The bill defines first-time home buyers as individuals who have never owned a principal residence prior to purchasing the home on which they intend to claim the credit. Additionally, home buyers who sell their homes within five years of claiming the credit would have to pay back a prorated portion of the credit they received unless there are unique circumstances such as job relocation or military deployment.
Senator Wyden’s press release on S. 3175 is linked here.