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There has been much talk recently of potential tax changes at both a federal and state level. These changes could impact everything from income taxes to student loans to potential home buyer tax credits. In recent years SC has offered the Mortgage Credit Certificate program with the slogan “spend a little, save a lot.” This program is geared at helping middle class potential homeowners find and purchase affordable housing. Qualifying homeowners were allowed to take a federal tax credit of up to $2000 with the purchase of a new home, providing that they live in the home, for as long as they live in it.
This valuable program was recently suspended for any homes closing after Dec. 31 since the House version of the Republican tax bill was slated to eliminate the financing tool behind the program. The Palmetto Heroes program that offers appealing mortgage programs such as lower interest rates and down payment assistance for teachers, first responders, correctional officers, law enforcement, nurses and CNAs, veterans and SC National Guard members faced a similar fate. Luckily, these programs seem to have made it through the proposed House and Senate compromise on the tax overhaul!
If you’re a first time-home buyer and considering making the move to homeownership, the MCC could be a tremendous benefit for you. You’ll likely hear people discuss the tax benefits of homeownership…that you can deduct some closing costs, mortgage interest, taxes and mortgage insurance premiums, to name a few. The MCC will likely save you much more than the federal mortgage interest deduction! The process requires you to apply at a participating bank during your home loan process when you’re purchasing in the state of South Carolina. If you don’t own another home at the time of purchase and you meet certain limitations on your income and the home price, you qualify.
The limitations vary by county but in many counties in the state a two-person household could earn up to $67,320 and purchase a home costing as much as $275,000. In Berkeley and Dorchester counties, the income limitation is $80,000 for a household of two. The MCC will allow you to take a federal tax credit for half of the mortgage insurance you paid that year, up to $2000 for as long as you live in the home. You don’t even have to itemize your deductions to take advantage of this credit. While the program won’t officially be re-instituted until there’s a vote on the final bill in Congress, now’s a great time to start doing your research and find your new home so when the day arrives, you’re ready. Take a look around and find a new neighborhood that will be perfect for you!
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