Our marketing team has received word from the office of Congresswomen Eleanor Holmes Norton (D-DC) that DC's popular $5,000 Homebuyer Tax Credit has not been renewed. We're told the Congresswoman is working on a plan to get the credit reinstated.
That means first-time homebuyers who may have otherwise qualified for the credit but bought their properties after Dec. 31, 2011 will not be able to claim the credit. The loss of this credit comes as no surprise to us since DC has one of the strongest housing markets in the nation.
In our office approximately 10% of DC closings took advantage of the $5,000 DC Homebuyer Tax Credit.
Due to high demand and low interest rates, the DC real estate market should fare well regardless of the tax credit. The city still offers the DC Tax Abatement Program. Qualifications are roughly the same but you get the benefit of a 1.1% credit toward closing costs plus you don’t have to pay real estate taxes for the next 5 years after closing.
The popular $5,000 DC Homebuyer Tax Credit was initially part of the Taxpayer Relief Act of 1997 and has been renewed – sometimes on a retroactive basis – for every tax year since. It was most recently renewed two years ago through the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
The credit also served as the model for the $8,000 First-time Homebuyer Credit offered to first-time homebuyers by the federal government for properties purchased in 2008, 2009 and 2010.
The homeownership rate in the District of Columbia was 42.8% in 2010 compared to just 28% in 2000, according to U.S. Census Bureau statistics, while median home values in DC increased from $157,200 to $442,600 over the same period of time. The census statistics show DC's median household income rose from $40,127 in 2000 to $61,835 in 2010.