Are you on the market for a new home? If so, you’ve probably searched for tax credits for first-time homebuyers to help save money on your big purchase. Perhaps you’ve even read about the MCC Tax Credit. Understanding tax credits can be complicated, which is why we’re here to explain how it works and how it can help you.
Tax Credits for First-Time Homebuyers
First-time homebuyers rejoice! There are a few tax credits and programs that help you get started on purchasing your first home. Many work as incentives that save you money with federally funded and state-to-state programs. If you’re a first-time homebuyer, there are several options to help you take this big step.
One of the tax credits for first-time homebuyers is called the MCC Tax Credit. It’s not as popular as some of the other programs out there, so not many homebuyers know it. Because it’s a bit complicated, let’s take a look at precisely what the MCC Tax Credit can do for you.
MCC Tax Credit: $2,000 Cash Back Annually
The biggest perk of the MCC Tax Credit is that it offers first-time homebuyers up to $2,000 cashback every year for up to 30 years. That’s a savings of up to $60,000 for your entire mortgage! To obtain this credit, all you have to do is simply apply for the MCC Tax Credit Certificate before buying a first time home. If it gets confusing, our CPA firm is here to help you every step of the way.
Defining “First-Time” Homebuyer
Of course, there are some restrictions to this program. To start, you must be a first-time homebuyer and obtain the certificate before purchasing your home. Unfortunately, if you just bought your house last week, you can’t take advantage of the MCC Tax Credit. What exactly is a “first-time homebuyer,” and do you qualify? Here are the conditions:
There are some other qualifications within the MCC Tax Credit Program. This program is state-by-state, so you’ll have to look at where you’re planning to purchase your home to determine caps on home prices and incomes. As an example, our offices are in Blair County, Pennsylvania. In our area, to qualify for the tax credit, you must fall into these limits:
Blair County is a more deprived area of the state, so these limits are as expected. Remember, qualifications in your area will be different.
The Big Caveat
It’s not that big, but it is essential to know. The MCC Tax Credit works with a percentage that differs from state-to-state. That’s why the credit is stated as up to $2,000. Some homebuyers may not qualify for the entire amount. However, if you meet the general requirements, you’ll undoubtedly receive some money back in your taxes each year.