Two West Coast legislators have introduced a new bill providing a refundable tax credit of up to $15,000 for first-time homebuyers, potentially fulfilling one of President Joe Biden’s campaign promises.
Rep. Earl Blumenauer, D-Ore., and Rep. Jimmy Panetta, D-Calif., introduced the “First-Time Homebuyer Act,” which creates a tax credit worth up to 10% of the purchase price — or $15,000 — for the purchase of a home. To be eligible for the full credit, a buyer may not have owned or purchased a home within the prior three years. Eligibility is also income-based, with homebuyers needing incomes at or below 160% of their area’s median income and the home for purchase at or below 110% of the area’s median purchase price.
“As housing prices and demand continue to rise to historic levels, we need to do more to create opportunities for those who’ve been locked out of homeownership by creating incentives for first-time homebuyers,” Blumenauer said. “This legislation is just one element of the big, bold housing agenda that we are promoting to combat the housing affordability crisis and address centuries of overtly racist and discriminatory housing policies that have left massive wealth, homeownership, and opportunity gaps between white communities and communities of color.”
A statement from Blumenauer specifically highlighted the struggles of racial minorities with regard to buying homes. The Congressman’s office noted that homeownership rates for Asian American and Pacific Islander communities lag those of white communities by more than 10%, while Black and Hispanic communities do so by more than 20%.
“The homeownership gap especially impacts families of color, who for too long have been disproportionally deprived of building wealth through homeownership,” said Panetta. “Families need help purchasing their first home, so they can fully achieve the American dream.”
The bill introduced by Blumenauer and Panetta is separate from the one published last week by a group led by Rep. Maxine Waters, D-Calif. That one would provide a grant of up to $25,000 to first-generation, first-time homebuyers in the form of downpayment assistance available at closing.
That proposal is not a tax credit, unlike the one First-Time Homebuyer Act would provide. Tax credits toward first-time homeownership have been received well before; when the Housing and Economic Recovery Act of 2008 provided for a first-time homebuyer credit of $7,500 (that increased to $8,000 in 2009), an estimated 1.5 million borrowers took advantage and purchased their first homes.
Sunny Shaw, president of the National Association of Housing and Redevelopment Officials (NAHRO), applauded the new bill.
“The refundable tax credit proposed in the bill would increase homeownership among low- and moderate-income Americans, especially those from marginalized communities with historically low homeownership rates,” said Shaw. “As part of its larger Diversity, Equity, and Inclusion Policy Framework, NAHRO supports efforts to fund equitable homeownership programs, and the First Time Homebuyer Act of 2021 would build wealth within communities that face systemic exclusions in the housing market. We look forward to the bill’s evolution and progression.”