Home Buying in Charlotte>Question Details

Carmen, Home Buyer in Concord, NC

Question about tax credits

Asked by Carmen, Concord, NC Fri Jan 4, 2013


I am looking to purchase my first home and I have been told that at the end of the year you basically get your year's mortgage payments back on your income tax return. Is this true or was this part of some government program that's not in effect anymore? Thanks for your help!

Help the community by answering this question:


Good evening, Carmen.
In the past, there were one time incentives for first time home buyers of $8,000 and $7,500. These are over. There are still some year end tax accounting strategies related to loan costs and interest deductions that you should talk with your accountant or CPA about. Your mortgage payment includes repayment of principal and interest to your lender. If the IRS refunded 100% of your mortgage payments, they would be paying your mortgage. They are not doing this.

The state of NC has a Mortgage Credit Certificate available to qualified borrowers (see http://www.nchfa.com/Homebuyers/HBwhatweoffer.aspx) For qualified borrowers, there is down payment and closing cost assistance of up to $7,500. There are also down payment matching grants of up to $4,000. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
1 vote Thank Flag Link Wed Jan 9, 2013

you do recover soem of your monthly mortgaqge payment back in the form of a tax credit. Your accountant would be better suited to give you a dollar amount. but what is tax deductible if you file the long form and itemize your deductions is your mortgage interest.

In years past I have itemized my deductions and received enough back to cover a few months of mortgage payments extra than what I had prior to owning a house. I have also had a year where the itemized deductions were nto as good as takign the standard deductions.

Your mortgage lender will provide you at the end of the year a form that will give you the interest you paid year to date, taxes paid and any mortgage insurance you paid. Those items when you itemize have places to be put in to see if it will be beneficial for you to itemize your deductions ro take the standard deduction.

Dave diCecco
Coldwell Banker United
0 votes Thank Flag Link Sun Jan 6, 2013
Today, there are no tax credits available for a first time home buyer. It is true, though, that you can deduct the interest you have paid as part of your mortgage on your tax return. In the first years of your mortgage, the majority of the payment you make each month goes to interest, so I suspect that this is what the person telling you that you would get your mortgage payments back meant. The mortgage interest deduction could be eliminated by Congress one day, so it is foolish to count on it as a part of your overall financial plan. One should NEVER make a purchase decision by counting on "getting your money back" through the mortgage interest deduction. ONLY purchase a home if you can COMFORTABLY afford your monthly payments outright! Do your homework and check in with a CPA who can give you a true picture of any tax benefit you would derive from owning a home. Only a tax professional is qualified to give you accurate information regarding taxation. Good luck with your home search and best wishes!
0 votes Thank Flag Link Sat Jan 5, 2013
You get to right off your interest and taxes you pay on the mortgage. You need to talk to a tax person about increasing your withholdings after you start paying your new mortgage so you can get more money back in your paycheck and not just a lump sum at the end of the year.
0 votes Thank Flag Link Sat Jan 5, 2013
".... at the end of the year you basically get your year's mortgage payments back on your income tax "
Wow!!! That sounds like FREE LODGING. FREE HOUSING!!!
Sounds Too Good To Be True.......and it is.
As Larry eluded to, take some time to chat, face-to-face with a real estate pro to sort out fact from fiction. Then your situation can be assessed and the possibilities laid out for your evaluation.
The program you describe NEVER existed, will never exist, and should not be part of your purchase decision. Tax credits or deductions are available at the whim of those in congress. They are a nice benefit as long as they exist, but, looking at the dysfunction in DC, I would not count on common sense to prevail.
Clearly, your question suggests you embrace an element of the need for risk aversion. You may even need some home payment support alternatives. Perhaps a strategy that allows you to select when and if you need to engage such mechanisms. WalkableHomes may be relevant for your consideration. Homes so qualified provide the bumps in the road safety net, or early pay-off or education or retirement funding. However, the RIGHT home must be selected. Chat with a real estate pro regarding this option.
PS: Please exclude the source of this bad information from your circle of real estate advisers. Home owners are a good source. Real Estate Pros are the best source.

Best of success in finding your new home,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
0 votes Thank Flag Link Sat Jan 5, 2013
Whoever told you this has absolutely no idea what their talking about and this has never been true. What you get back is a deduction on your mortgage interest at your income tax level. Here's an example:
you paid a total of $10,000 in mortgage interest. Your at the 20% tax rate. You would receive a $2000 tax credit. As my father would say, "It's better than a poke in the eye with a sharp stick ", but it's a long way from getting your mortgage payments back as a tax credit.

Do not buy a home based on tax credits/deductions, I've personally owned close to 30 homes over the years, this has never once been part of my thinking process, and it shouldn't be part of anyone eles's either. Yes you should take whatever tax breaks you can but you should not make decisions on what to buy based on a possible tax credit.

I would suggest two things to you the first is you should check out the North Carolina Housing website.for information on programs available to first time NC homebuyers; http://www.nchfa.com/

Secondly find yourself a great buyer broker to help you. I've attached a link below to a blog I posted a while back on how to do this regardless of where you live.

I wish you a healthy and exciting 2013 and happy house hunting.
0 votes Thank Flag Link Sat Jan 5, 2013
At this time, your interest on your mortgage is tax deductable. I am finding that most buyers I am working with are paying less with a mortgage payment than they were in rent.

Give me a call or email to discuss further.

Abby Nelson
0 votes Thank Flag Link Fri Jan 4, 2013
No you can include the interest paid each year as an itemized deduction on your schedule A along with other items like mortgage insurance, property taxes, medical expense amounts that exceed 7.5% of your income to mention a few; hoping that this amount is greater than your standard deduction for your filing status.

Although I am not a tax professional, I did stay at a Holiday Inn Express last weekend. (just kidding! you should be certain to consult your tax advisor as individual results may vary.)

As Russell mentioned, you may want your loan officer to research your qualifications for a Mortgage Credit Certificate. It's an additional tax credit.
0 votes Thank Flag Link Fri Jan 4, 2013
This is not true. Your interest is tax deductible from your income. Although this is helpful, it is nowhere near getting your full mortgage payments back.

Email me directly for more help if you don't have a buyer's agent! My services are free for buyers!


John Siddons
0 votes Thank Flag Link Fri Jan 4, 2013
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