Yes; it's true there is still a 1st Time Home Buyer Tax Credit in Washington DC.

For the past year we have been focused on the Federal 1st-Time Home Buyer Tax credit of giving folks up to an $8,000 credit on their Federal Taxes.  Well with that credit; we never gave a thought to our old friend; the DC $5,000 Tax credit.

This $5,000 tax credit applies to anyone who hasn't owned a principle resident in the District during the one-year period ending on the date of purchase plus an individual must make less than $90,000 to be eligible for at least some tax relief. If married and filing jointly, the ceiling is $110,000. 

Since the DC Tax Credit is smaller and couldn't be combined with the Federal Tax Credit, no one really paid attention to it.

So Who is eligible for the DC Tax Credit? 

Generally, the DC Tax Credit can be claimed in the year that the principal residence has been purchased as long as the purchaser(s) did not own another principal residence in the District of Columbia during the one year period ending on the date of purchase. 

NOTE: Unlike the Federal Tax Credit, the DC Tax Credit only requires that you be a DC First-time Homebuyer. Even if you are ineligible for the Federal Tax Credit since you own a property in another jurisdiction, you may be eligible for the DC Tax Credit. 

How much is the credit for? 

The maximum credit is for $5,000, or $2,500 if married filing separately. The credit begins to phase out when the modified adjusted gross income exceeds $70,000 ($110,000 if married filing jointly) and ends at $90,000 ($130,000 if married filing jointly). 

Are there any exclusions? 

Yes. You cannot claim the credit if you are eligible to claim the Federal Tax Credit or if you purchased your home from related persons or by gift or inheritance. Related persons include, among others, grandparents, parents, spouses, children and grandchildren. 

Also, the DC Tax Credit can only be claimed once, so it is not available if already claimed on another property. 

Contact James Downing of the Downing Real Estate Group, if you are selling, buying or have questions!

Office: 202-362-5800   Cell: 703.244.3971

Licensed in Washington DC, Virginia & Maryland.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100 * Washington DC 20016