How is
Mortgage Credit Calculated?
Imagine you pay $5,360* in interest on
your home during the first year. If that home is in a non-target
area, you can claim 20% of the interest, or $1,072, as a direct
tax credit; meaning you will free up $1,072 to help make your
loan payments. If the home was in a target area, you could claim
25% of the interest as a tax credit, and you could claim 30% of
the interest as a tax credit for an REO home.
Keep in mind that each year the amount of
interest you pay on your loan will decrease, which means your
mortgage credit will also be reduced each year.
In addition:
- Your tax credit cannot be larger than
your annual federal income tax liability after deductions,
exemptions, and other credits; meaning that you cannot
receive a $1,072 tax credit if you do not owe at least
$1,072 in taxes.
- Your personal deductions may
change from year to year, which will affect the amount
of your tax credit.
- If you have a large number of
personal deductions—for example, if you are a single
income family with multiple children—this program may
not be right for you.
- The maximum tax credit you can
receive is $2,000 per year.
*$5,360 is
about what you would owe in interest during the first 12 months
on a $90,000 fixed-rate mortgage at 6% interest.
Find out
if you can qualify for this money saving program. Contact Teresa
Today. 614-565-8161 or Teresa@TeresaButler.com
