First-time home buyer tax credit now available

house for saleIowans buying a home may be able to take advantage of a tax credit that can significantly reduce their federal income taxes.

Eligible first-time home buyers can get a tax credit on 50 percent of the annual interest paid on their mortgage, up to $2,000 per year, for up to 30 years. The remaining mortgage interest may be taken as a deduction from taxable income if the home buyer itemizes.

The program is expected to benefit about 780 Iowa homebuyers this year, saving them $1.5 million. Certificates are available on a first-come, first-served basis. Home buyers must meet certain household income and purchase-price limitations, must be pre-approved and must close a mortgage with an Iowa Finance Authority Participating Lender.

A first-time home buyer is defined as someone who has not owned their primary residence in the past three years, but also includes home buyers purchasing in a federally Targeted Area and qualified veterans who have not used tax exempt mortgage financing previously.

This “Take Credit” mortgage program, administered by the Iowa Finance Authority, is not a new program. It was first authorized by Congress in the 1984 Tax Reform Act. To learn more, visit www.iowafinanceauthority.gov/takecredit.

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