The First-Time Home Buyers Tax Credit was introduced during the 2008 financial crisis to make home shopping more affordable for Americans. While there are many other mortgage and loan programs, the tax provisions here were strictly for first-time home buyers. It gave homebuyers a big tax credit for the year they bought the home. Unfortunately, this credit no longer exists. Below, let's look at what the tax credit program has done and explore other mortgage plans that can help you save on your first home. A financial expert can also help you plan a home purchase and determine what deductions and loans you may be eligible for.
What is the first-time homebuyer tax credit?
The Obama administration first passed the Federal first-time homebuyers tax credit in 2008. Created in response to the 2008 financial crisis, the Housing and Economic Recovery Act (HERA) allowed new home buyers to get a tax credit up to $7,500 in the initiative's first year. In 2009, Congress increased the amount that first-time buyers could earn to $8,000. After the first two years, HERA has undergone some minor changes. Thanks to this initiative, new homeowners could get a tax credit or a mortgage that they would have to pay later. While the changes were minimal, the mission was the same: to help first-time buyers.
Does the First-Time Homebuyer Tax Credit still exist?
If you are looking for a first-time homebuyer credit, it unfortunately no longer exists. The program ended in 2010. However, people who bought their first home before 2010 are still eligible for the tax credit initiative. You may still be qualified if your closing took place before September 30, 2010. However, anyone who purchased a home after 2010 is not eligible for the tax credit.
Although the tax credit is no longer available, mortgage assistance can still be obtained through other mortgage programs. These incentives for first-time homebuyers vary by state and locality. But you can start the research process with an online search. One of the best places to look for these incentives is on local and state government websites. The Department of Housing and Urban Development (HUD) also offers several loans and subsidy options for home buyers.
What can you deduct after buying a home?
While the first-time tax credit is no longer an option, there are other deductions you can still claim if you are a homeowner. The most important is the mortgage interest deduction, which allows you to deduct mortgage interest up to $ 750,000.
Mortgage interest is the interest rate that accompanies a home loan. The commission accompanies most home loans, where lenders use the home as collateral for the mortgage. The mortgage interest rate is usually a fixed rate, an adjustable-rate, or both. The fixed-rate dividend will charge the borrower a certain percentage of interest over the loan's life. However, adjustable-rate mortgage interest rates fluctuate based on market behavior. This implies that the amount of interest you pay per month may vary. Finally, the hybrid adjustable mortgage rate comes with a fixed initial interest rate. However, the interest rates fluctuate after the initial period ends.
Property taxes are also a great way to deduct. You can cancel your annual property taxes in the year you pay them. When it comes to mortgage insurance, you can receive an insurance premium if you have made an advance of less than 20% of the house's original value. Under IRS law, the mortgage insurance premium is considered mortgage interest that can be deducted on Schedule A of Form 40.
Bottom Line
Even if you may no longer take advantage of the first-time homebuyer tax credit, you can still save a lot of tax money through other tax cuts. Mortgage options often vary by city and state but don't worry. The primary deductions any homeowner can benefit from include property taxes, mortgage interest, and insurance, and mortgage points. The first-time homebuyer tax credit has expired, but your ability to save on the first purchase certainly isn't.
The process of buying a home for the first time can be quite tiring, so it is important to identify your financial situation and determine if mortgage insurance is necessary. If you think you can't afford a 20% down payment on your first purchase, remember that there are plenty of options for loans and mortgages.
Before taking out a large mortgage, it may be helpful to consult a financial advisor to determine how much you can afford and how it will affect your finances and taxes.
FOR MORE INFORMATION OR TO MAKE AN APPOINTMENT WITH SCNEIDERMAN & FRIEDMAN, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Schneiderman and Friedman