There is a special federal tax credit for home buyers in Ohio. This is not a one-time tax credit, but one that may require from the buyer from year to year. It is called a mortgage credit certificate, and it creates a tax deduction that reduces the family income tax liability and allows the household to have more discretionary incomes or more income to make a higher mortgage payment. The Mortgage Credit Certificate (MCC) is administered by the Ohio Housing Finance Agency (OHFA) and is only available for purchases in Ohio. The percentage that the borrower pays for interest on mortgage loans becomes a tax credit that the borrower can deduct for the US dollar at the expense of his income tax liability. This percentage can be 20%, 25% or 30%. 20% for houses with non-target area, 25% for houses of target areas and 30% for REO objects. The remaining interest on mortgage loans still qualifies as a substantive tax deduction if the borrower has sufficient tax liabilities. A mortgage loan certificate is only available for a home purchased as a primary residence.
How to calculate a tax credit.
The calculation is simple. The borrower can calculate the tax credit by taking the total amount of interest paid in a calendar year and multiplying it by 20%, 25% or 30% depending on the classification of the purchase. Again, 20% for a home without a goal, 25% for a target home, or 30% for a REO real estate. Please keep in mind that the maximum tax credit that can be declared is $ 2,000 per year with a mortgage loan certificate, and the borrower cannot claim an amount in excess of their federal income tax for the year.
There are income requirements for the program, and income varies depending on the county, the number of people in the household family, regardless of whether the acquired housing is in the target or non-target area, and if this property is the 1st family, 2 families, 3 families or 4 families. The limits of the purchase price vary depending on whether the house is new, existing or located in the target or non-target area. Attention. FHA loan limits may be less than purchase price restrictions.
In addition to the income limits and the purchase price, in order to qualify a home buyer, you must also meet the following three conditions:
- Occupy the property you buy as your main residence for each year you apply for an MCC. If the property ceases to be your primary residence, OHFA may withdraw your approval from the MCC.
- Be creditworthy. You must meet the standard credit and writing criteria set by the IRS and HUD for the MCC Program.
- Perform one of the following actions:
- Be the first time homebuyer (Not having a share of ownership in their main residence for the last three years.)
- Purchase a home in the target zone.
- Be a military veteran who received an honorary discharge.
Additional property requirements
- New or existing single-family units, condominiums and planned home development units in Ohio.
- Modular or fabricated homes should be permanently attached to the foundation and have the right to real estate.
Types of loans
- There must be a fixed rate loan.
- Can not be refinanced loan.
- FHA, regular, VA, USDA-RD all qualify.
Mortgage loan certificates will be available for homes that are closing March 23, 2009 or after this date.
This program is not available to all lenders. If you are interested in finding out more or finding out if you have your next step, contact the right mortgage specialist who can advise you on a mortgage loan program. A mortgage specialist familiar with the mortgage program can check the rules and eligibility criteria to determine if you are eligible.
