Happy New Year! I thought I’d start 2011 with a little good news! Is a real estate purchase or sale on your list of things to do this year? Contact me, I’m always happy to help!
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The DC first-time homebuyer $5,000 tax credit
For District of Columbia residents who missed the April 30 deadline for the $8,000 Federal First-time homebuyer Tax Credit, there’s another tax credit to cash in on. Many have forgotten that DC 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.
Congress renewed the $5,000 DC homebuyer tax credit for two more years as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the office of Congresswoman Eleanor Holmes Norton (D-DC) announced. The DC tax incentive will be retroactive for 2010 and continue through 2011.
An individual making less than $90,000 is eligible for at least some tax relief. If married and filing jointly, the ceiling increases to $110,000.
Since the DC Tax Credit is smaller and couldn’t be taken simultaneously with the Federal Tax Credit, it has largely been ignored. Now that the federal credit has expired, the DC Tax Credit, which has not expired since it took effect in 1997, will regain some of its appeal during the second half of this year.
Frequently Asked Questions
1) Who is eligible for the DC Tax Credit?
Unlike the 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 jurisdiction, you may be eligible for the DC Tax Credit.
2) Who May Claim the Credit?
• You purchased a main home during the tax year in the District of Columbia; and
• 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.
If you constructed your main home, you are treated as having purchased it on the date you first occupied it. Your main home is the one you live in most of the time. It can be a 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.
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