First-Time Homebuyer Tax Credit Act of 2025

Direct Financial Assistance for Homebuyers: Individuals who are first-time homebuyers can receive a credit equal to 10 percent of their home's purchase price, up to a limit of $15,000. This is intended to assist those purchasing a principal residence (Section 2(a)).

Flexibility in Receiving the Credit: Taxpayers have the option to elect to have the credit transferred directly to their mortgage lender rather than receiving it themselves, which can be used as a down payment or partial payment (Section 2(h)).

Inflation Protection: The dollar limits for the credit are subject to annual inflation adjustments based on cost-of-living, helping the benefit keep up with economic changes in years following 2025 (Section 2(b)(1)(4)).

Protection for Specific Professionals: Members of the armed forces, the Foreign Service, or the intelligence community are exempt from certain recapture rules when disposing of a residence due to qualified official extended duty service (Section 2(f)(4)(D)).

Income-Based Reductions: The amount of the credit can be reduced based on the taxpayer's modified adjusted gross income if it exceeds 150 percent of the applicable Area Median Income (Section 2(b)(2)).

Purchase Price Limitations: The credit can be reduced if the purchase price of the residence exceeds 110 percent of the area median purchase price (Section 2(b)(3)).

Risk of Tax Recapture: If a taxpayer sells their principal residence or stops using it as their primary residence within a four-year "recapture period," they may have to pay back a portion of the credit (Section 2(f)(1)).

Strict Eligibility Requirements: To qualify as a "first-time homebuyer," an individual must have had no present ownership interest in a residence during the 3-year period ending on the date of purchase (Section 2(c)(1)).

Documentation Burdens: To avoid having a credit disallowed, taxpayers must attach a properly executed copy of the settlement statement used to complete the purchase to their tax return (Section 2(d)(3)).