With Tax season fast approaching; it is important for those Home Owners who purchased a property in Washington DC in 2007 to remember about the DC First Time Home Buyer Tax Credit.

The Tax credit, originally part of a tax cut plan in 1997; has been extended a few times; most recently last December and is currently valid through 2007.

This Tax Credit applies to first-time home buyers* in the District of Columbia.  *(A person who did own a home in the District of Columbia for 1 year preceding the purchase date; but could have owned a home elsewhere.)

The home must be their PRIMARY Residence; not a second home or investment property.

The credit is $5,000, if single, married filing jointly, head-of-household, or qualifying widow.  If married filing separately the credit is $2,500.

The Home Buyer must have a modified adjusted gross income (AGI) of less than $70,000 if they are single or married filing separately.  For married filing jointly the maximum AGI must be less than $110,000 to receive the full credit.

If the income exceeds the 70k/110k limits; a partial credit is given.  For every $1,000 of income above, the tax credit is reduced by $250. Credit eligibility ends at $90,000 for single tax filers and at $130,000 for joint tax filers.

The tax credit is reported on Form 8859, and the taxpayer must file Form 1040 to claim this credit.

This is a 1-Time Tax credit - but it is a straight $5,000 credit (if you qualify for the amount).

(As always contact your accountant or tax preparer with specific questions.)

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