Unfortunately, the First-Time and Repeat Homebuyer Tax Credits expired last week. However, even though this powerful tax incentive is now over, it doesn’t mean that you are out of luck. There are undoubtedly many prospective home buyers, like you or someone you know, who simply needed more down payment resources, had to work on a couple of credit issues, or could just not find the right home before the deadline expired.
All is not lost. One of the most underutilized resources available to most homebuyers in the Houston area is the Mortgage Credit Certificate (MCC). These programs allow many home buyers to obtain a tax credit every year they own the house and pay interest on their mortgage. Yes, you read that correctly. While the first time and repeat homebuyer tax credit was front-loaded with a value of $8,000 or $6,500, what if you could get a tax credit of up to $2,000 each and every year? This is far more valuable than the popular homebuyer credit.
For example, let’s say a single person or married couple purchases a home priced at $130,000, puts $5,000 down and thus finances $125,000. Under the First Time Homebuyer Tax Credit, this borrower would receive a tax credit valued at $8,000 that could be claimed on their 2010, or retroactively on their 2009 tax return. Instead, we will assume they missed the deadline, and their combined income is less than $76,560 per year ($89,320 if they have children or other dependents). If these borrowers qualified for a Mortgage Credit Certificate, they would receive a tax credit each year they own their home. The annual tax credit would be 30% of the interest paid each year. Using our example above, the value of these annual tax credits over ten years amounts to $17,159.96. In addition, most MCC programs are transferable to the new owners if the buyers ever sell their home. Most importantly, there is currently no first-time homebuyer requirement!
If you are interested in finding out more details about these programs and how you might qualify, give us a call at (832) 286-1600 and we will walk you through it!
