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Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. Read more about Dan Green.
Homebuyer.com is your trusted guide to homeownership. Since 2003, our team has offered real-world expertise and advice to tens of millions of U.S. home buyers. Our content stands on its integrity: it's factual, unbiased, and free from outside influences. Read more about our governing editorial guidelines.
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First-time home buyers may soon benefit from a new $15,000 tax credit, courtesy of the DASH Act.
The DASH Act is a congressional housing bill introduced in March 2023. It promotes safe and affordable housing and includes a $15,000 first-time home buyer tax credit.
The DASH Act’s official name is Senate Bill S.680.
This article reviews the critical elements of the DASH Act, including how it helps renters, cities, and communities; and how first-time home buyers can get a $15,000 tax credit while achieving their American Dream of homeownership.
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The DASH Act, which stands for Decent, Affordable, Safe Housing for All, is a bill introduced by Senator Ron Wyden.
The bill creates home construction incentives, directs more funds to cities for zoning and improvements, and expands homeownership opportunities for first-time buyers. It benefits low- and moderate-income households, affordable housing builders, and state and local housing agencies.
There are more than twenty sections in the DASH Act. Here is a summary of its key components:
For first-time home buyers, the most notable aspect of the DASH Act is its $15,000 refundable tax credit, which we discuss in more detail below.
The DASH Act includes a refundable first-time home buyer tax credit of up to $15,000.
Eligible first-time buyers receive credits against their tax bill equal to twenty percent of their home’s purchase price, up to a maximum credit of $15,000. If the DASH Act credit exceeds the buyer’s overall tax bill, the U.S. Treasury issues a refund check.
To claim the DASH Act’s tax credit, first-time buyers must meet eligibility requirements in four areas.
The DASH Act defines a “first-time home buyer” as someone who has never owned a home. This definition differs from how other first-time home buyer programs define first-time buyer, which reduces the number of DASH Act-eligible buyers.
In addition, DASH Act buyers must meet other qualifying standards, too.
Note that the DASH Act does not require home buyers to be first-generation home buyers or members of a minority or protected class.
Low- and no-down payment mortgages are allowed.
To claim the full $15,000 tax credit offered by the DASH ACT, a first-time buyer must purchase a home meeting the bill’s requirements.
The first DASH Act home requirement is that the subject property becomes the buyer’s main residence within 60 days of closing. The tax credit applies in the year the buyer takes occupancy.
The second requirement is that the buyer purchases the home in an arms-length transaction. An arms-length transaction is a purchase where the buyer and seller are unrelated by marriage or family.
The third DASH Act home requirement is that the subject property sale price may not exceed local conforming mortgage loan limits by more than 10 percent.
In most parts of the country, the 2023 conforming loan limit is $726,200, which puts the DASH Act limit at $798,000. When buyers purchase homes above DASH Act limits, their federal tax credit reduces by $1,500 per $10,000 in the purchase price until the credit is no longer available.
Lastly, the DASH Act tax credit is limited to 20 percent of a home’s purchase price. Buyers who purchase homes for less than $75,0000 receive a smaller credit.
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The DASH Act places income limits on home buyers based on the buyer’s federal tax filing status and their modified adjusted gross income.
Modified adjusted gross income is the sum of everything you earned – wages, tips, investment income, farm income, and more – minus certain tax-deductible expenses such as retirement plan contributions, student loan interest, and specific business expenses.
To get the DASH Act’s entire $15,000 first-time buyer tax credit, buyers and their modified adjusted gross income must meet the following eligibility requirements:
The DASH Act places additional restrictions, too, to prevent buyers from gaming the tax credit.
People claimed as a dependent on another person’s tax returns cannot get the $15,000 DASH Act tax credit, and married persons who file separately from their spouse cannot get the DASH Act credit. Buyers who earn a modified adjusted gross income up to fifty-thousand dollars above DASH Act limits receive a reduced federal tax credit that gradually phases out as income levels rise.
Consult with your accountant for questions about your income and tax filing status.
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The DASH Act first-time home buyer tax credit requires buyers to make their home a primary residence within 60 days of purchase. Buyers who purchase second homes, vacation homes, and short- and long-term rental properties are ineligible for the DASH Act tax credit.
Furthermore, buyers who change their primary residence within five tax years of purchase are subject to a pro-rata recapture, payable to the IRS.
The DASH Act repayment schedule is as follows:
The DASH Act allows for exceptions to the 5-year rule for homeowners who face unforeseen and severe circumstances.
Some of the DASH Act repayment exceptions include the following:
DASH Act recipients may appeal any recapture requests with the Internal Revenue Service.
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The DASH Act $15,000 first-time home buyer tax credit is automatic. There is no application required.
There are also no financing restrictions. Buyers can claim the DASH Act tax credit whether paying cash for a home or financing with a mortgage, including:
When eligible buyers purchase their first home, they should submit an attestation with that year’s tax filing including the settlement statement from the purchase or a closing disclosure from their mortgage company.
The DASH Act tax credit adjusts annually with inflation, rounded to the nearest thousand. Therefore, if inflation is 5 percent in the program’s first year, the maximum DASH Act tax credit rises to $16,000.
The IRS maintains the official DASH Act records for home buyers.
Homebuyer.com fields questions from our customers, readers, and YouTube channel subscribers. Here are some of the questions other first-time home buyers ask us about the DASH Act:
Yes, first-time buyers can claim the DASH Act tax credit for purchasing a new construction home.
The DASH Act defines a first-time home buyer as someone who has never owned a home. Other first-time buyer programs define a first-time buyer as someone who hasn’t owned a home in the last 36 months.
Yes, the DASH Act is a tax credit that buyers can combine with other first-time home buyer grants, including the $25,000 grant for first-time buyers and any local or municipal cash grant programs.
The DASH Act tax credit is limited to 20 percent of a home’s purchase price. Hence, buyers of $60,000 homes receive a maximum $12,0000 federal tax credit.
Yes, the DASH Act is a bill to help first-time home buyers. There are no restrictions on how buyers finance a home. Cash buyers are allowed.
The HELPER Act, which is officially titled “Homes for Every Local Protector, Educator, and Responder Act”, is a no-money-down, no mortgage insurance program for teachers, law enforcement officials, and firefighters. We expect the HELPER Act to pass into law as early as mid-2023.
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Mortgage Rate Assumptions
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of , but please remember that mortgage rates change without notice based on mortgage bond market activity.
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of {{ formatDate(rates[0].createdAt) }}, but please remember that mortgage rates change without notice based on mortgage bond market activity.
Our mortgage rate assumptions may differ from those made by the other mortgage lenders in the comparison table. Your actual mortgage rate, APR, points, and monthly payment are unlikely to match the table above unless you match the description below:
You are a first-time buyer purchasing a single-family home to be your primary residence in any state other than New York, Hawaii, and Alaska. You have a credit score of 660 or higher. You are making a down payment of twenty percent and using a 30-year conventional fixed-rate mortgage. You earn a low-to-moderate household income relative to your area.
The information provided is for informational purposes only and should not be confused for a mortgage rate commitment or a mortgage loan approval.
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