Extension of $5,000 Federal Tax Credit for First Time Homebuyers
In October, President Bush renewed a tax provision that allows a $5,000 tax break for District first-time homebuyers. The tax break had expired on December 31, 2003 (from the Taxpayer Relief Act of 1997 (P.L. 105-34).
The revived legislation provides for a two-year extension of the Taxpayer Relief Act, from January 1, 2004, through January 1, 2006.
First-time homebuyers are allowed to reduce their federal income taxes by up to $5,000. However, the credit is phased out above certain income levels. This credit will now be available for home purchases made before January 1, 2006.
Representative Eleanor Holmes Norton and a coalition of DC government and business representatives actively pursued renewing this important incentive. This same group will most likely renew their efforts in the next session of Congress as the incentives are set to expire at the end of 2005.