Although the deadline for qualifying for the Federal $8,000 First Time Buyer Tax Credit has expired, there is a tax credit of up to $5,000 still available for first time buyers in the District of Columbia. This program, first introduced as part of the Taxpayer Relief Act of 1997 and later extended via the Families Relief Act of 2004 and the Tax Extenders Act of 2009 is targeted at aiding low and moderate income families in purchasing a first home in the District.
Any first-time buyer in the District, you can even qualify even if you own or previously owned a home in another jurisdiction as long as it is not the District.
Amount of Credit:
Up to $5,000 for married joint-filing taxpayers and $2500 for individual taxpayers
Married joint-filing taxpayers up to $130,000 and individual taxpayers up to $90,000 in modified adjusted gross income (AGI) are eligible. A credit phase out kicks in for AGI above $110,000 for married joint-filing and $70,000 for individual taxpayers.
Ownership Interval Penalties:
Unlike the Federal tax credit which requires a three year period of ownership, there are no restrictions on the timeframe that a taxpayer must own a home under the DC program.
Qualifying dwelling types include house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence.
Homes purchased from related persons, by gift or inheritance are not eligible. Related persons include but are not limited to grandparents, spouses, children and grandchildren. The credit can only be claimed once, so if you have previously taken the credit on another DC property, you cannot claim it a second time. Homes that are not your main home where you live the majority of the time are also not eligible. Homebuyers filing for the Federal First Time Buyers Tax Credit are also not eligible for the DC tax credit.
Filers claiming the credit must use IRS form 1040 or 1040NR and and attach IRS Form 8859 District of Columbia First-Time Homebuyer Credit.