If you are a first-time home buyer, you should know that the federal government is making home buying a rewarding experience for you. The government is offering first-time home buyers an incentive in the form of tax credit as consolation for purchasing a new home. This government offering proposes a lump sum incentive by reducing the total contract price of the newly acquired home through mortgage interest tax relief.
The History Behind the First Time Homebuyers Tax Relief
President Barack Obama signed this bill in 2009, dubbed as the 2009 First-time Home Buyers Tax Credit, as an essential part of the American Recovery and Reinvestment Act to strengthen the flailing economy and to give the American consumer the purchasing power it needs by providing tax incentives. According to this bill, as a first-time home buyer you can qualify for tax relief amounting to $8,000 if you haven’t owned a legitimate home during the last three years and your accumulated individual or household income is less than $75,000.
Mortgage Credit Certificate Program t
As a first-time home buyer, you can also enjoy tax credits through the Mortgage Credit Certificate Program. This involves reducing your housing expense ratio by applying tax savings into the computation. It deliberately reduces the your annual mortgage interest rate. Recipients of this incentive program will no longer opt for mortgage refinancing in the near future, since the program will apply very low rates, comparable to that of refinanced mortgage rates.
Tax relief reduces the your tax liability as a home buyer. By adjusting federal withholding income tax, you can receive monthly tax relief benefits. This translates to more savings and more reserved income for you. If you qualify, you may claim a maximum tax credit of 15 percent. Realtors and bank institutions can discuss the complete details and will guide you in applying.
Extents and Limitations of MCC
The MCC will continue in effect as long as you live in the home and the original mortgage remains in place. Refinancing your mortgage will automatically discontinue the benefit. The same applies if you decide to sell the property or purchase a new home. In addition, MCC is not available in all states.
- New York State: Federal Income Tax Credit for First Time Home Buyers
- Journal Sentinel: Housing Bill Targets First-time Home Buyers
- State of California Franchise Tax Board: 2010 Tax Credit for New Home / First-Time Buyer
- Development Commission County of Los Angeles: Mortgage Credit Certificate
- National Association of Realtors: American Recovery and Reinvestment Act of 2009