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The Federal $8000 credit has been gone since April, 2010, but DC residents still have help just when it's needed! Congresswoman Eleanor Norton has won another two-year extension of the $5,000 DC homebuyer tax credit. The incentives are retroactive for 2010 and will continue through 2011. This is in addition to the five-year property tax abatement program currently in effect in DC. Income limits apply for both programs and you will need to complete separate forms for them. If you are considering the purchase of a new home in DC for the first time, contact Rachel Valentino and her team of DC real estate experts to help you determine how the DC homebuyer tax credit can help put you in a new home.

What is the DC homebuyer tax credit? It is a credit against the home purchaser's federal income tax. Homeowners can get a credit of up to $5,000 for their purchase.

Who is eligible for the DC homebuyer tax credit? Anyone who is a first-time buyer in DC is eligible for the tax credit. Persons who have previously owned a home outside of the District are also eligible. Purchasers may not have owned a home in DC for at least one year prior to the new purchase.

Are their other eligibility requirements? There are income restrictions for the tax credit. Married jointly-filing taxpayers with incomes up to $130,000 and individual taxpayers with incomes up to $90,000 qualify for the credit. KEEP IN MIND THOUGH -- this is adjusted gross income, so even if you are over these income brackets, it's possible you may still qualify. Pay for an accountant & find all of your applicable deductions so you can take advantage of this perk too... it will save you tons!

The credit begins to be phased out for married jointly-filing filers with incomes between $110,000 and the $130,000 limit. For individuals, the credit phase-out begins at $70,000. For example, single filers making $70,000 (or joint filers making $120,000) would receive a $2,500 credit; single filers making $90,000 (or joint filers making $130,000) would not receive the credit.

In addition, the dwelling must be residential. This includes houses, house-trailers, houseboats, cooperative apartments, and condominiums. There are no period-of-ownership restrictions or requirements.

How is it different from the DC Tax Abatement Program? The DC Tax Abatement Program is a property tax abatement. New homebuyers can exempt their home from property taxes for 5 years. The DC homebuyer tax credit is a credit against homebuyers' federal income taxes.

Are there any exclusions from the homebuyer tax credit? Homes purchased from related persons, by gift or inheritance, are not eligible. Related persons may include, but are not limited to, spouses, children, grandchildren, and grandparents. The credit can only be claimed once. If you have previously taken the credit on another DC home you are not eligible to claim it a second time. Homes that are not your main residence are not included in the tax credit program.

The DC Homebuyer Tax Credit is one of the ways to help you purchase a new home in the District of Columbia. To determine your eligibility for the tax credit as well as other homebuyer incentives, contact DC's real estate expert Rachel Valentino of Valentino & Associates. She can show you how the DC homebuyer tax credit can help put you in a new home.

P.S.  Feeling left out because you want to buy in Maryland? If you are a first-time homebuyer, you can qualify for an exemption from paying your portion of the State Transfer Tax (.25% of the Sales Price). This only applies as long as all buyers in the transaction have never owned a Maryland home before. Ask Rachel for the details.