H.R. 4717: First-Time Homebuyer Tax Credit Act of 2025

The bill known as the First-Time Homebuyer Tax Credit Act of 2025 aims to provide financial assistance to first-time homebuyers in the United States by offering a refundable tax credit. Here’s a summary of the key provisions:

Tax Credit Details

• The tax credit allows first-time homebuyers to receive a credit equal to 10% of the purchase price of their principal residence.
• The maximum credit amount is capped at $15,000. For married individuals filing separately, the cap is $7,500.
• If two or more unmarried individuals purchase a home together, the total credit among them cannot exceed $15,000 and will be divided according to regulations set by the Secretary of the Treasury.

Income Limitations

• The credit amount will be reduced based on the buyer's area median income. Specifically, if the buyer's modified adjusted gross income exceeds 150% of the applicable area median income, the credit decreases proportionally until it phases out completely.
• The Secretary of Housing and Urban Development will determine the applicable area median income and provide guidance on how the credit is adjusted based on income levels.

Purchase Price Limitations

• If the purchase price exceeds 110% of the area median purchase price, the credit will be further reduced, ensuring that the total credit amount does not exceed allowable limits.
• The area median purchase price will also be defined by the Secretary of Housing and Urban Development.

Inflation Adjustment

• Starting in the year 2026, the credit amounts will be adjusted for inflation, ensuring that the values remain relevant over time.

Age and Eligibility Requirements

• Applicants must be at least 18 years old to qualify for the credit.
• A first-time homebuyer is defined as someone who has not owned a principal residence in the three years prior to the purchase and who has not claimed this credit in previous tax years.

Exceptions and Recapture

• If the residence is sold or ceases to be the primary residence within the tax year, the taxpayer will not be eligible for the credit.
• There’s a recapture provision that requires taxpayers to repay a portion of the credit if they dispose of the home within a certain time frame.

Transfer of Credit

• Homebuyers may transfer the credit to the mortgage lender at the time of purchase. This means that the lender can claim the credit instead of the homebuyer, which may facilitate financing options for the buyer.

Reporting and Documentation

• Taxpayers must provide necessary documentation to substantiate their eligibility for the tax credit when filing their tax return.
• The bill includes provisions for the Secretary to issue regulations to ensure compliance and facilitate the implementation of these credit provisions.

Effective Date

• The provisions of this bill will take effect for principal residences purchased after the bill is enacted.

Key Definitions

• Principal Residence: Refers to the main home that the taxpayer uses for living.
• Modified Adjusted Gross Income: Includes the taxpayer's adjusted gross income with certain exclusions added back in.

Relevant Companies

• PHM - PulteGroup: This homebuilder may experience increased demand for homes due to the tax credit, potentially impacting sales and profitability.
• DHI - D.R. Horton: As another major homebuilder, D.R. Horton might see a boost in sales as first-time homebuyers leverage the tax credit.
• GRBK - Green Brick Partners: Being a homebuilding company, Green Brick may benefit from enhanced buyer capacity driven by the credit.