DC’s First-Time Buyer Tax Credit Is Gone, But Maybe Not For Good

• November 8, 2010
• 6 Comments

by Joe Marhamati

The $5,000 tax credit available to DC home buyers expired at the end of 2009, but that doesn’t mean that DC buyers may never be able to take advantage of it again. UrbanTurf placed a call to Congresswoman Eleanor Holmes Norton’s office this morning, and a representative said that while there is no timeline for passage of another credit, if and when it is enacted, it could be applied retroactively for DC residents who have purchased a home since the credit expired at the end of 2009. Below is an overview of the credit and how it can be applied for, if legislation is passed enacting it.

Quick Overview

The DC tax credit was not just for those who had never owned property before; you could qualify for the credit so long as you had not owned property in DC within the year previous to when you applied for it. The property must have been a primary residence (house, condo, or co-op), and it could not have been a gift or inherited from a family member. Most importantly, eligibility was limited to those making less than $90,000. If you made $70,000 or less annually ($110,000 filing jointly), you qualified for the full $5,000; if you made between $70,000 and $90,000 ($110,000 and $130,000 jointly), you qualified for a partial credit. If the credit is enacted again, the requirements will likely be similar to those above.

Claiming the First-Time Credit

When in effect, there was not a lot of readily available information online about how one would go about claiming the tax credit, but all that was required was simply filling out IRS Form 8859 and submitting it with your annual tax returns. If after filing your taxes it was determined that you owed money to the federal government, the credit would cover that liability up to the amount you qualified for. If you were owed money by the government, then the $5,000 was factored in to the refund that you received.

Update: After 45 minutes on the phone with the IRS, UrbanTurf was told that the DC credit is actually still active. However, the IRS representative could not provide any offical written confirmation of this statement. The Holmes’ office position appears to be the most credible source at this time.

This article originally published at http://dc.urbanturf.com/articles/blog/dcs_first-time_buyer_tax_credit_is_gone/2651

6 Comments

1. TL said at 12:05 pm on Monday November 8, 2010:

   In the past, this form/credit hasn’t been consistently included in many tax-preparation software packages or on tax preparation web sites.  Some who are attached to using a particular software or web-based solution may need to find an alternate, or else file by mail.

1. Alec said at 12:17 pm on Monday November 8, 2010:

   I hope it comes back soon. I bought two months ago, and that $5K would def help offset some of my closing costs.

1. Chris said at 2:37 pm on Monday November 8, 2010:

   It was my understanding that this tax credit is effective in 2010.

   http://blog.redfin.com/washingtondc/2010/05/the_dc_first-time_home_buyer_tax_credit.html

   http://www.dccondoboutique.com/blog/dc-first-time-homebuyer-tax-credit.html

1. tom said at 3:19 pm on Monday November 8, 2010:

   if you claimed the $8,000 in 2009 and you move within 36 months, you have to pay it back. anyone know if you can then file an amended return and claim the $5,000 instead (which doesn’t have the residency requirement)?

1. Susan Isaacs said at 1:56 pm on Tuesday November 9, 2010:

   Perhaps there is confusion because of the way the tax credit has been handled in the past. My understanding is that the credit doesn’t usually get approved until year-end. So it is not (yet) in effect for 2010 but it could, again, be made retroactive. Or not. Or it could be approved as a twofer—-like it was in ‘08 when it was approved retroactively for 2008 and in advance for 2009. That would be nice! So kind of a spotty pattern, but hopefully it will continue at least for 2010. Time to email your congressional representative!

1. Nikki Smith said at 1:36 pm on Thursday January 6, 2011:

   Congress renewed the $5,000 DC homebuyer tax credit for another two 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 last month. The DC tax incentive will be retroactive for 2010 and continue through 2011.

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