One of the advantages of home ownership is the home mortgage interest deduction allows taxpayers who own their own home to reduce their taxable income by the amount of interest paid on the loan which is secured by their principal residence. The first year’s interest on a $200,000 mortgage with a 4.375% interest rate is $8,684. If you were in a 15% tax bracket, your first year’s home mortgage interest deduction would have a value of $1,302.
If you are buying a home in Nevada, you may qualify for mortgage credit certificates (MCC) through the Nevada Rural Housing Authority Home at Last™ Mortgage Tax Credit (MTC) program. The Nevada Rural Housing Authority Home at Last™ Mortgage Tax Credit (MTC) program is the home mortgage interest deduction on steroids. The Home at Last™ Mortgage Tax Credit Program (more commonly referred to as MCC) is a certificate issued by the State of Nevada that reduces your tax liability, dollar-for-dollar, by an amount equal to the lesser of $2,000 or 40% of the interest paid during a given tax year. On the same $200,000 mortgage with a 4.375% interest rate, and a 15% tax bracket, your tax benefit would be over $3,000. The Home at Last™ Mortgage Tax Credit would be $2,000 and you would still get to deduct the remaining $6,684 from your taxable income. Bases on a 15% tax bracket, this adds another $1,002 to your tax benefit.
Because the Home at Last™ Mortgage Tax Credit is a tax credit and not a tax deduction, mortgage lenders will often use the estimated amount of the credit on a monthly basis as additional income to help the potential borrower qualify for the loan. Based on today’s NRHA and NHD 4.375% FHA, USDA and VA interest rate, adding the tax credit to your monthly income could increase your buying power by $30,000 or more.
The MTC benefit is now available statewide thanks to a partnership between the Nevada Rural Housing Authority and the Nevada Housing Division. If you are a first time homebuyer (have not owned a home within the previous 3 years) or a qualified veteran, you may be eligible for the Home at Last™ Mortgage Tax Credit (MTC) program.
- First-time homebuyers (have not owned a home in the past three years) purchasing a primary residence.
- Qualified veterans who will live in home as primary residence
- Veteran who has been honorably discharged;
- First time homebuyer serving on Active Duty; or
- National Guard service personnel.
- Households meeting Income qualifications and normal FHA, VA, Conventional or USDA underwriting requirements
- Home purchase falls below the county’s maximum price
- Buyer must complete homebuyer education
The cost of the MTC Program is 1% of your loan amount, plus a $175 application-processing fee. As of January 1,2015; Qualified Veterans will receive a $400 discount off their Nevada Rural Housing Authority and Nevada Housing Division MTC fees. On loan amounts up to $182,500, your will recover your cost within the first year. On larger loan amounts, you will recover you investment within the first two years. The below chart illustrates the relationship between the cost of the Home at Last™ Mortgage Tax Credit (MTC) program and the return after 5-years, 10-years and 30-years of living in the home and making the minimum payment each month.
Buyers using the Home at Last™ MTC program are typically subject to a recapture tax if they sell their home within 9 years of purchase. However, NRHA now offers a reimbursement program for buyers; which removes any risk of having to pay the recapture tax.
I refer to the Home at Last™ Mortgage Tax Credit (MTC) program as “the gift that keeps on giving.” I know of no other investment where you can get this type of guaranteed return on your investment.
When combined with the NRHA Home at Last™ Home at Last™ or the NHD Home is Possible™ 4% non-repayable down payment assistant grant, eligible buyers will not only save on their down payment and closing costs, but for the life of their loan. For additional information, call Doug Kaller, Academy Mortgage @ (775) 828-7006, or email email@example.com. I look forward to helping you realize the dream of owning your own home.
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