Earlier this week, Congresswoman Eleanor Holmes Norton introduced the District of Columbia Incentives for Business and Individual Investment Act which, if passed, would bring back the $5,000 first-time home buyer tax credit.
The credit was first enacted in 1997 as a way to stabilize the District and bring back residents who were fleeing the city. It was renewed year after year until 2011 when Congress allowed the credit to expire.
Now that the bill has been introduced, what does it mean and why is it happening? Here is a quick Q&A primer. (UrbanTurf had hoped to speak directly with Rep. Norton today, but her schedule didn’t allow for an interview. When we speak with the Congresswoman, we will update this article.)
DC’s housing market seems strong, and people keep moving here. Why do we need this sort of initiative now?
According to Rep. Norton’s statement when introducing the bill, there are a couple reasons.
Firstly, while there are many new residents, the percentage of homeowners is still fairly low. “The city’s residential tax base remains well below the Washington metropolitan region and the nation, where it trails all 50 states,” the statement read. “In 2012, the homeownership rate in D.C. was 45 percent, compared to the national rate of 65.4 percent.”
Additionally, though many neighborhoods throughout the city have been revitalized, others have not. Norton is particularly concerned with the neighborhoods east of the Anacostia River and in certain sections of Northeast, which, she noted, are “on the brink of developing economically.”
From the statement:
Withdrawing these incentives, particularly after they have proven effective elsewhere in city, leaves the nation’s capital with essentially half of a revival, and would be tragically timed just as the lower-income parts of the District, which need the incentives most, are ready for residential and commercial redevelopment.
Would all first-time home buyers in the District be eligible?
No. The credit is mainly directed at low- and middle-income residents. When the credit was in place, only those making up to $70,000 were eligible for the full $5,000. Those making between $70,000 and $90,000 were eligible to a portion of the credit proportional to their income.
Will first-time buyers who purchased earlier this year be eligible for the credit retroactively?
Yes. According to Rep. Norton, the credit will be retroactive for 2012 and any portion of 2013 before the bill becomes a law, and will be active until the end of 2015.
What is the timeline for passage of the bill?
Rep. Norton introduced the bill on July 31st. Presumably, it will wind its way through Congress over the next few months. We’ll keep you updated if it seems to be moving forward in any way.
This article originally published at http://dc.urbanturf.com/articles/blog/the_return_of_the_5000_first_time_home_buyers_tax_credit/7402
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