Thanks to the DASH Act, first-time home buyers may soon be able to take advantage of a $15,000 tax credit.
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 official name of the DASH Act is Senate Bill S.680.
This article reviews important elements of the DASH Act, including how it helps tenants, cities, and communities; And how first-time home buyers can earn a $15,000 tax credit while living the American dream.
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Introduction to the DASH Act (Senate Bill S.680)
The DASH Act, which stands for Decent, Affordable, Safe Housing for All, is a bill introduced by Senator Ron Wyden.
The bill creates homebuilding incentives, directs more money to cities for zoning and improvements, and expands homeownership opportunities for first-time buyers. It benefits low- and moderate-income families, affordable housing manufacturers, and state and local housing agencies.
There are more than twenty sections in the DASH Act. Here is a summary of its key components:
- $10 billion allocated for housing trust fund
- Tax breaks for construction in hard growth areas
- $65 million for state housing agencies
- $10 million for modular home studies
- $125 million for cities loosening zoning laws
- Permanent Grants to Agencies Supporting the Homeless
- Funding for the manufacture and protection of household supplies for domestic agricultural laborers
- $250 million in rental assistance for rural, low-income Americans
- Tax exemption for builders of affordable housing
- Permanent tax break for operating low-income housing
- Reduced tax loopholes on the sale of rent-controlled buildings
- Zoning protections for builders of affordable homes
- Tax exemption on buildings with ancillary services for tenants
- Funding for study to convert commercial buildings into homes
- Tax breaks for landlords who rent to low- and moderate-income tenants
- $450 million in subsidies for construction in low- and middle-income neighborhoods
For first-time home buyers, the most notable aspect of the DASH Act is the $15,000 refundable tax credit, which we’ll discuss in more detail below.
DASH Act $15,000 first time homebuyer tax credit
The DASH Act refundable first-time home buyer tax credit of up to $15,000.
Eligible first-time buyers receive a credit on their tax bill equal to twenty percent of the purchase price of their home, up to a maximum credit of $15,000. If the DASH Act credit exceeds the buyer’s overall tax bill, the US Treasury issues a refund check.
To claim the DASH Act’s tax credit, first-time buyers must meet qualification requirements in four areas.
DASH Act Requirement #1: Home Buyer
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 a first-time buyer, thereby reducing the number of DASH Act-eligible buyers.
In addition, buyers of the DASH Act must meet other eligibility standards as well.
- Must be at least 18 years of age
- cannot be claimed as a dependent by another person
- Must be a US citizen or permanent resident alien
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.
DASH Act Requirement #2: Home
To claim the full $15,000 tax credit provided by the DASH ACT, a first-time buyer must purchase a home that meets the bill’s requirements.
The first DASH Act home requirement is that the subject property become the principal residence of the buyer within 60 days of closing. The tax credit is applicable in the year the buyer takes possession.
The second requirement is that the buyer purchases the home in an arm’s-length transaction. An arm’s-length transaction is a purchase where the buyer and seller are not related by marriage or family.
The third DASH Act home requirement is that the subject property sale price cannot exceed 10 percent of the local conforming mortgage loan limit.
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 the DASH Act limit, their federal tax credit is reduced by $1,500 per $10,000 in purchase price until the credit is available.
Finally, the DASH Act tax credit is limited to 20 percent of the home’s purchase price. Less credit is available to home buyers who buy homes for less than $75,0000.
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DASH Act Requirement #3: Home Buyer Income
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 receive the full $15,000 first-time buyer tax credit of the DASH Act, buyers and their modified adjusted gross income must meet the following eligibility requirements:
- Buyers who file as single: $100,000 per year
- Buyers who file as single with dependents: $150,000 per year
- Buyers who file jointly with a spouse: $200,000 per year
The DASH Act also imposes additional restrictions to prevent buyers from gambling tax credits.
People claimed that being a dependent on another person’s tax return could not get the $15,000 DASH Act tax credit, and that married individuals who file separately from their spouse could not get the DASH Act credit. Buyers earning a modified adjusted gross income of up to fifty thousand dollars above the DASH Act limit receive a reduced federal tax credit that gradually expires as income levels rise.
Consult your accountant with questions about your income and tax filing status.
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DASH Act Requirement #4: Home Buyer Occupancy
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.
In addition, buyers who change their primary residence within five tax years of purchase are subject to pro-rata repossession payable to the IRS.
The DASH Act repayment schedule is as follows:
- Proceed before 31st December next year: 100% repaid
- Proceed before December 31 of Year 2: Repay 80%
- Proceed before December 31 of Year 3: Pay 60%
- Proceed before December 31 of Year 4: Pay 40%
- Proceed before December 31 of Year 5: Pay 20%
The DASH Act allows for exceptions to the 5-year rule for homeowners facing unforeseen and extenuating circumstances.
Some of the repayment exceptions to the DASH Act include the following:
- death of the householder or their spouse
- transfer to military duty
- job loss or job transfer
- Illness that results in an inability to work or maintain employment
DASH Act recipients can appeal any reclaim requests with the Internal Revenue Service.
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How to Apply for the DASH Act $15,000 Tax Credit
The DASH Act automatic first-time home buyer tax credit of $15,000. No application is required.
There are also no financial restrictions. Buyers can claim DASH Act tax credits whether paying cash for the home or financing with a mortgage, including:
When eligible buyers purchase their first home, they must submit a verification including settlement statement from the purchase or closing disclosure from their mortgage company with their tax filing for that year.
The DASH Act tax credit is adjusted annually for inflation, rounded to the nearest thousand. Therefore, if inflation is 5 percent in the first year of the program, the maximum DASH Act tax credit increases to $16,000.
The IRS maintains official DASH Act records for home buyers.
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DASH Act: Questions Home Buyers Are Asking Us
Homebuyer.com takes questions from our customers, readers, and YouTube channel members. Here are some questions other first-time home buyers ask us about the DASH Act:
Can I use the DASH Act tax credit for a new construction home?
Yes, first-time buyers can claim the DASH Act tax credit for purchasing a new construction home.
What’s different about how the DASH Act defines “first-time home buyer”?
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 has not owned a home in the past 36 months.
Can I combine the DASH Act tax credit with other first time home buyer programs?
Yes, the DASH Act is a tax credit that buyers can combine with other first-time homebuyer grants, including the $25,000 grant for first-time buyers and any local or municipal cash grant programs.
What happens to my DASH Act tax credit if I buy a $60,000 home?
The DASH Act tax credit is limited to 20 percent of the purchase price of the home. Therefore, buyers of $60,000 homes receive a maximum of $12,0000 federal tax credit.
Can I Claim the DASH Act Tax Credit If I Paid Cash for the Home?
Yes, the DASH Act is a bill to help first time home buyers. There are no restrictions on how buyers can finance a home. Cash buyers are allowed.
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