First-Time Homebuyers Got Billions in Tax Credits
Two of the more popular federal recovery programs of 2009 was the tax credit provided to first-time homebuyers. To qualify, the taxpayer needed to prove it was his or her first home purchase and that it would be the primary residence.
For the two years 2009 and 2010, income tax credits valued at more than $19.2 billion were granted by the Internal Revenue Service (IRS) to 2.7 million homebuyers.1 An average tax credit of $7,182 was received by those taxpayers. Utah had the highest average, at $7,617, while Michigan tallied the lowest at $6,308. That’s a pretty wide difference of $1,309 from the highest to the lowest averages (see Figure 1).
Figure 1: Average Homebuyer’s Tax Credit per Taxpayer, 2009 to 2010
Source: IBRC, using Internal Revenue Service data
Comparing the popularity of this credit by state, we calculated the number of first-time homebuyers per 1,000 population for each state (based on 2010 Census population figures). Nevada by far had the most claimants of this credit, at 13.7 per 1,000. Nebraska was a bit further behind, at 11.9, along with North Dakota (11.7), Idaho (11.6) and Arizona (11.4).
Indiana had a rate of 9.6 claimants per 1,000, putting it close to the middle of the states.
Interestingly, although not surprising considering its high housing costs, Hawaii came in last with a rate of only 5 claimants per 1,000. New York also had among the lowest rates of credits (5.2 per 1,000). Figure 2 shows the states in comparison by these rates.
Figure 2: Rate of Taxpayers Receiving Homebuyer’s Tax Credit per 1,000 population, 2009 to 2010
Source: IBRC, using Internal Revenue Service data
Overall, a little more than 62,000 Hoosier homebuyers received $426 million in tax credits in 2009 and 2010, with an average of $6,868 in credit per qualifying taxpayer (see Table 1).
Table 1: First-Time Homebuyer Tax Credit in Indiana, 2009 to 2010
| Measure | 2010 | 2009 | Total |
|---|---|---|---|
| Number of Taxpayers | 52,599 | 9,452 | 62,051 |
| Value of Credits | $ 357,595,336 | $ 68,556,490 | $ 426,151,826 |
| Average Credit per Taxpayer | $ 6,799 | $ 7,253 | $ 6,868 |
Source: IBRC, using Internal Revenue Service data
While this federal credit is no longer available, the Indiana Housing Authority still has a number of programs available to assist first homebuyers.
Notes
- The IRS is a wonderful source for income and tax credit statistics. These data reflect the First-Time Homebuyer Credit claimed and granted by the IRS after adjustments. Under the American Recovery and Reinvestment Act of 2009 and the Worker, Homeowner, and Business Assistance (WHBA) Act of 2009, taxpayers could claim the credit either on their 2008, 2009 or 2010 tax returns: www.irs.gov/uac/First-Time-Homebuyer-Credit-1.
Carol O. Rogers
Deputy Director and Executive Editor, Indiana Business Research Center, Indiana University Kelley School of Business