The First Home Affordability Act creates a new refundable tax credit worth up to $25,000 (or $12,500 for married filers filing separately) to help first-time homebuyers purchase their primary residences. The credit equals 10% of the home's purchase price and is distributed over five years, though teachers, childcare workers, and first responders can claim the full amount in a single year. The credit applies only to homes purchased with federally-backed mortgages, phases out for buyers earning more than 150% of their area's median income and homes priced above 110% of local median prices, and must be repaid if the home is sold within five years. Buyers can transfer their credit directly to their mortgage lender, who will provide it as a down payment or cash payment and receive IRS reimbursement for the transferred credits. The bill applies to homes purchased after enactment and treats certain credit-claiming errors as correctable mistakes rather than serious tax violations.
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