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Tuesday, August 24, 2010

Information about the DC First-time homebuyer tax credit

In case you were questioning if now was a good time to purchase a home in Washington, DC...look no further!

Despite the end of the Federal first-time homebuyer tax credit, DC has continued the $5,000 DC First-time homebuyer tax credit until the end of the year. Here is more information you need to know as follows:

Who qualifies for the DC tax credit?
The tax credit is aimed at people buying their first principle residence in the District of Columbia. This means that owning a previous primary residence outside of DC does not hurt your eligibility. If you haven’t owned a primary residence in DC, you qualify for the local tax credit, even if you’ve previously owned homes in other areas.

Also, you qualify as a first-time DC home buyer as long as you haven’t owned a DC home in the one-year period prior to the purchase of your home. The national tax credit had a stricter requirement; it required buyers to have no primary home ownership for three years prior to home purchase.

How much is the DC tax credit worth?
The credit’s value is the lesser of:

-Up to $5,000, if single, married filing jointly, head-of-household, or qualifying widow(er)
-$2,500 if married filing separately


What types of homes qualify for the DC tax credit?
The home must be your primary residence. It can be a single family home, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence.

Are there any income restrictions for the DC tax credit?
The income restrictions are based on your modified adjusted gross income (MAGI):

If your MAGI is $70,000 or less ($110,000 or less if married filing jointly), you qualify for the full $5000 credit.
If your MAGI is between $70,000 and $90,000 ($110,000 and $130,000 if married filing jointly), you qualify for a partial credit; the more you make, the less credit you receive.
If your MAGI is over $90,000 ($130,000 if married filing jointly), you do not qualify for the credit.

Are there any other restrictions?
You do not qualify for this tax credit if:

-You acquired your home from certain related persons or by gift or inheritance. Related persons include, but are not limited to, your grandparents, parents, spouse, children, and grandchildren.
-You previously claimed this tax credit on a prior home purchase.
-You qualified for the national home buyer tax credit.

How do I claim the DC tax credit?
You must fill out IRS Form 8859 and submit it with your annual tax returns.



Call me at 301-452-4767 if you have any real estate questions!

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