Buyers may take advantage of property tax deductions and exemptions to help offset the costs of purchasing a home. Federal, State and County Governments offer different types of exemptions, including the following:
State Housing Finance Agencies manage a program which grants buyers a tax credit on their mortgages. The Mortgage Tax Credit Certificate (MCC) allows a credit for a portion of the interest paid on your mortgage during the year to be deducted from your taxes. The percentage varies from 20% to 40% of the annual interest paid on the mortgage, depending on the state.
Buyers can use the tax credit when you file federal taxes or add it to your W-4 form from your employer to lower the amount of federal income taxes withheld from your paycheck.
This is a separate tax credit from a Mortgage Interest Deduction or Homestead Tax Exemption.
Property taxes paid on a state or county level may be deducted from federal taxes for buyers who itemize their deductions.
Buyers can claim mortgage interest paid as a deduction on federal taxes by filing an itemized tax return.
Homestead exemptions will lower the buyer’s property taxes.
There are 21 states that have homestead exemption opportunities. In these states, the buyer can file an exemption application with the county property appraiser after the purchase of the home, usually between January 1st and April 30th of the following year. Your housing counselor or mortgage lender will be able to tell you if there is a homestead tax exemption available in your state.
A buyer may be able to claim a tax-deduction on mortgage insurance payments. Private mortgage insurance is a fee a buyer has to pay when the buyer’s down payment is less than 20% of the purchase price of the home.
Do you have little or no income?
Be aware that some housing assistance programs have a minimum income requirement, such as Low-Income Housing Tax Credit aparments.Douglas Cook says:
"Affordable Housing Online is a good resource to keep you updated."