Depending on your annual income, you may qualify for a mortgage interest credit. In order to receive this credit, you will need a Mortgage Credit Certificate (MCC). The IRS will require the MCC in order to grant the interest credit so be sure to speak with a Loan Officer to find out if you qualify.
The Mortgage Credit Certificate allows first-time homebuyers to reduce tax liability dollar-for-dollar by a percentage of the interest paid on the mortgage. This credit can range from 20% to 35%, depending on the MCC program. However, any interest not included as part of the tax credit can still be eligible for home mortgage interest deductions on your federal tax returns.
If you purchased a home with the MCC this year be sure to have these handy when filing your taxes this season:
- Mortgage Credit Certificate (issued directly after closing)
- IRS Form 8396 (attach this to your 1040 form)
We recommend consulting with a tax professional so that you can best maximize your savings!
2019 has come to an end which means tax season is right around the corner. Soon it will be time to prepare your 2019 tax returns and it pays to be ready! Getting prepared early can not only save you time and stress but potentially money. It’s especially important if you have experienced major changes throughout the year such as getting married or buying a home. The IRS encourages early preparation and has recently shared a few tips that can give you a head start.
Always make sure you’re paid up on your taxes is important. The IRS expects that you will have paid most of your tax bill by the time you file your return. If your taxes are being withheld from your pay, chances are that’s enough to cover your total bill and even leaves you with extra for a refund. But keep in mind life events can happen which affect your tax withholding. You will want to make sure your withholding will also take care of any other income you receive from other sources such as a business or investments.
Of course, you won’t start receiving your W-2s or 1099s until January at the earliest, but there are a few things you can do while you wait. Gathering important records and documents ahead of time will allow for a quicker return. Making sure your address is up to date with your employer and investment providers will ensure you receive these forms in a timely manner. Creating a checklist is also very helpful and can be used every year. Look at your old tax records to compile of list of what materials you were sent. Use that list to create a checklist so you know what to expect throughout the tax season. If you have recently purchased a home, there are some additional documents you may need to gather such as the settlement statement, property tax statement, and if you’re a first-time homebuyer, your Mortgage Credit Certificate.
When you’re all set to file, consider doing so electronically! Every year the IRS is encouraging tax payers to file electronically for many reasons. Not only is filing electronically quicker and secure, it’s easier and is highly accurate. Anyone with a bank account is eligible for direct deposit. Meaning your refund will be automatically sent to you bank account, so you won’t have to wait to receive the check in the mail.
Now that the holiday season is over, preparing for tax season should be on the forefront of your mind. Taking steps to ready yourself will prove to be beneficial in the future.
Virginia Housing Development Authority (VHDA) offers a variety of affordable home mortgages to Virginians who otherwise might not be able to afford quality housing. Add available special features, such as the Down Payment Assistance Grant and Mortgage Credit Certificate with a VHDA Loan Combo and increase money-saving benefits.
What does the VHDA Loan Combo consist of?
Plus Free Homebuyer Class
Plus Down Payment Money
Plus MCC Homebuyer Tax Credit
Resulting in Big Savings!
Start with a VHDA Mortgage:
- Conventional Fannie HFA Preferred™ with Reduced Mortgage Insurance
- Conventional Fannie 97 with No Mortgage Insurance
- VA (Veterans Administration)
- USDA (Rural Housing Service)
Then see what benefits apply:
Down Payment Assistance Grant (DPA)- Contributes to the down payment for eligible first-time homebuyers. No repayment is required.
Mortgage Credit Certificate (MCC)- A federal tax credit that reduces the amount of federal income tax owed. Eligible first-time homebuyers can potentially save money on their taxes every year that they live in their home. This is a dollar-for-dollar credit against federal income tax liability.
Free Homebuyer Class- This class offers in-depth information on navigating the mortgage process and how to achieve your financial and homeownership goals.
Want to see if you qualify? Contact a First Home Loan Officer.