Americans may receive a $10,000 tax credit for buying or selling a home amid surging home values and soaring mortgage rates.
In his State of the Union address, President Joe Biden proposed a new plan aimed at fixing America's housing crisis. Under his new plan, first-time home buyers would receive a $10,000 tax incentive. The plan would also provide a separate $10,000 tax credit for current homeowners who sell their "starter home." This could help encourage homeowners who are hesitant to move to a bigger home now amid higher mortgage rates.
Biden's plan will provide qualifying first-time home buyers $400 a month in tax credits for the next two years. On the other hand, those who sell their starter homes will receive a one-year tax credit of up to $10,000, according to a fact sheet released by the White House.
"I know the cost of housing is so important to you," Biden said during his State of the Union speech Thursday night. "If inflation keeps coming down, mortgage rates will come down as well. But I'm not waiting."
Biden: I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put towards their mortgage when they buy their first home or trade up for a little more space. pic.twitter.com/ra21We4fRO
— Acyn (@Acyn) March 8, 2024
Biden's proposal would still need to be enacted by Congress. It is unclear whether it will progress during a presidential election year.
Who Qualifies for the Tax Credit
The two-year $10,000 tax credit would be available to middle-class, first-time home buyers. Meanwhile, the one-year tax credit for homeowners would be given to people who own starter homes who sell to another owner-occupant and not an investor. Starter homes are defined as houses below the median price in the county.
Why Biden's Tax Credit Proposal Matters
If enacted, Biden's tax credit could help Americans buy homes at a time when housing affordability is very low. Per the fact sheet, the tax credit would be equivalent to lowering the mortgage interest rate for a median-price home by 1.5% for two years.
Currently, Americans must make more than $106,000 to afford a typical home comfortably. In comparison, American households only needed $59,000 four years ago to purchase a home.
