OTHER HOMEOWNER TAX BREAKS
• The Mortgage Interest Deduction. This is one of the most beneficial tax breaks that homebuyers can take advantage of, first-time buyer or otherwise. The IRS allows you to deduct from your taxable income the interest you pay to your lender. Home mortgage interest is one of the largest deductions for those who itemize. Lenders will report your mortgage interest on a 1098 form sent out annually. The Mortgage Interest Deduction is valid for loans up to $750,000. Homebuyers receive a large benefit in the first years after buying, as the first repayments have the highest interest. To claim the Mortgage Interest Deduction benefit, a homebuyer will have to file an itemized tax return. • Mortgage credit certification. The Mortgage Credit Certification is another program that helps thousands of first-time homebuyers secure a tax break. This IRS program is aimed at helping lower-income groups afford their first home. The MCC program is designed to offset a portion of the mortgage interest on a new mortgage to help homebuyers qualify for a loan. Because it is a tax credit and not a tax deduction, mortgage lenders will often use the estimated amount of the credit on a monthly basis as additional income to help the potential borrower qualify for the loan. Depending on the price at which you purchased your home, you can get back up to 30% of the interest you pay as tax credit. The program is administered by local authorities and can vary according to the state you live in. To qualify for this tax credit, you will need a Mortgage Credit Certificate issued by the local
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