First Time Home Buyer Tax Credit : How to Get it from States?

first time home buyer tax creditThe answer to the often asked question “Is there a tax credit for first time home buyers?” is a definite no as far as tax credit while computing Federal Income Tax is concerned because  first-time home buyer tax credit provision was applicable for taxpayers who  purchased a home as your primary residence in 2008, 2009 or 2010.  Therefore , as of now ,this program still applies to some people but not to others who did not buy the home during 2008 t0 2010. But , there is some hope under State tax law as most of the states in United States still provides some kind of tax credit for first time home buyers.

States First Time Home Buyer Tax credit Program

Each state has specific programs headed up by their housing finance agencies that offer some sort of home buying assistance. Each state has set different parameters as to who can qualify, how to qualify and what the particular benefits are. You can get detailed list about each of the state that provides some kind of tax credit for first time home buyer by visiting the link and clicking on the map

States Mortgage Credit Certificate (MCC) Program
Some of the state , cities & counties have housing finance agencies that  offer a federal tax credit from the IRS known as the Mortgage Credit Certificate (MCC) Program that offers income-eligible first-time homebuyers an ongoing federal tax credit which maybe a dollar for dollar reduction in their federal tax liability for as long as 30 years! You are eligibel for the MCC credit if following conditions are fulfilled :

  • must not have owned and occupied a home in the past three years (unless buying in a target area)
  • must meet the applicable income limits which vary by county
  • must purchase a home that is below the county’s purchase price limit
  • must continue to occupy the home and keep the loan to claim the credit

States That Gives You Tax Credit for First Home Buy are

  • Alabama – AL
  • Arkansas AR 
  • Colorado – CO 
  • Hawaii – HI 
  • Indiana – IN 
  • Iowa – IA 
  • Michigan – MI
  • Mississippi – MS
  • Montana – MT
  • North Carolina – NC
  • Ohio  – OH
  • Texas – TX
  • Washington – WA * 

Note that if you sell the home it in the first nine years and your income has gone up substantially (more than 5% a year over the maximum limits) you may be required to pay a federal recapture tax to the Internal Revenue Service (IRS). Check

Can you be considered a first time home buyer again?

The first-time homebuyer is defined , in most of the States , as “someone who has never owned a home or hasn’t been a homeowner in the last three years.”

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