# What the American Homeownership Opportunity Act of 2024 Actually Does

This bill creates two new tax credits designed to help people buy their first homes and encourage builders to construct affordable starter homes. Think of these as government incentives to make homeownership more achievable for people who haven't owned a home before.

## The First-Time Homebuyer Credit

The main part of this bill gives first-time homebuyers a tax credit of up to $25,000 to help cover their down payment. Here's how it works in practice: if you're buying your first home and you put down $20,000, you'd get a $20,000 credit on your taxes. If your down payment is $30,000, you'd get the maximum $25,000 credit. This credit essentially reduces the taxes you owe, putting money back in your pocket after you buy. The bill gets even more generous for people from disadvantaged backgrounds—those who aged out of foster care, were emancipated from their parents, or whose parents never owned property can claim up to $50,000. Income limits apply, though they're fairly generous: married couples earning up to $300,000 can claim the full credit, with the benefit phasing out as income rises above that threshold.

There's an interesting option built in: instead of waiting until tax time to get your money back, you can ask the government to deposit your credit directly into an escrow account before you close on your home, essentially giving you the down payment assistance upfront. There's a catch, though—if you sell the home within five years, you'll have to pay back the credit. The main exceptions are if you're buying a new primary residence, if you die, or if you're in the military and receive orders for extended duty.

## The Starter Home Construction Credit

The second part of the bill targets builders by offering them a tax credit equal to 15 percent of their construction costs for small, affordable homes. If a builder constructs a 1,000-square-foot home and spends $100,000 on labor and materials, they'd get a $15,000 credit. The credit doubles to 30 percent if the home is sold to a first-time homebuyer. To qualify, homes must be no larger than 1,200 square feet and priced at no more than 80 percent of the area's median home price—ensuring the incentive targets genuinely affordable housing. Each state gets an annual allocation of credits based on its population, with $30 per resident as the baseline, adjusted for inflation each year.

Together, these provisions aim to tackle homeownership from both sides: making it easier for buyers to afford a down payment while encouraging builders to construct the affordable homes that first-time buyers can actually afford.

American Homeownership Opportunity Act of 2024

Gomez, Jimmy

American Homeownership Opportunity Act of 2024This bill provides a new refundable tax credit for first-time homebuyers and a new tax credit to home builders for the construction of starter homes, both subject to limitations.First-time homebuyers may claim a tax credit equal to the amount of the down payment up to $25,000 (or $50,000 for first-generation homebuyers), subject to income limitations. The amount of the tax credit is reduced based on how much a first-time homebuyer’s income exceeds $300,000 for joint filers or surviving spouses, $225,000 for head of household filers, and $150,000 for single filers.&nbsp;The bill requires first-time homebuyers to add the amount received as a tax credit to taxable income if, within five years from the purchase, the house is sold, leased, or is no longer used as the principal place of residence (some exceptions apply).The bill also provides a tax credit for home builders of up to 15% of construction costs (materials and labor) incurred to build a home that is no larger than 1,200 square feet and is sold for an amount that does not exceed 80% of the median home prices for the area. The amount of the tax credit increases to 30% if the home is sold to a first-time home buyer.Finally, under the bill, each state receives an annual allocation for the tax credit for the construction of starter homes, for allocation by the state’s housing finance agency to developers (similar to the administration of the low-income housing tax credit).&nbsp;