March 19, 2024
A new mortgage tax credit proposal from the Biden administration could make buying a home more affordable for first-time home buyers.
The President’s proposal includes a credit potentially worth up to $10k per homeowner for qualifying transactions.
If the plan is approved, those buying starter homes and/or first-time home buyers could get into a more affordable mortgage.
Why Now?
According to RedFin, 2023 was the least affordable year to try to purchase a house.
In 2023, those making approximately $78,000 “would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022” according to a report by RedFin.
And many American homeowners today pay on loans with mortgage interest rates lower than those currently available for purchase or refinance.
That would tend to make owners less willing to sell. An offset is needed to make new transactions more affordable, at least according to the thinking behind the proposed tax credit.
How The Mortgage Relief Credit Could Work If Passed
The Biden proposal has not been approved at press time, but if approved, those basics could include a $5k tax credit offered to first-time home buyers in two successive tax seasons.
The White House has noted that this credit may be equivalent to lowering the mortgage interest rate on “a median-price home.” in terms of how much would be saved under the plan.
How much? Some 1.5 percentage points of savings anticipated over the two-year tax credit.
Another Angle Of The Biden Tax Credit Plan
The Biden plan would include a single-year tax credit created for homeowners living in starter homes who want to sell. This part of the plan could be approved for up to $10 thousand as a tax credit for middle-class homeowners selling to another borrower who will occupy the home.
What defines a starter home for the tax credit? Houses priced below the average house sale price in the county where the sale happens.
This Plan Is Not Yet Approved
The plan above is not yet an official policy. It is an idea only at press time and should be considered a developing story.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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