TaxSmart Mortgage Credit Certificate
TaxSmart is a Mortgage Credit Certificate (MCC) program that provides a federal income tax credit to qualified home buyers. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive an MCC to reduce income taxes by an amount equal to 20% of the interest paid on a mortgage. The tax credit may be claimed each year the home buyer continues to live in a home financed under this program.
Federal law requires that a home buyer satisfy each of the following guidelines:
First time Home buyer or Target Area Purchase: Any person who has not owned a principal residence at any time during the three years prior to closing a loan under this program is considered a first time home buyer. Non first time home buyers are also eligible if they purchase a home in a a designated target area.
Income: Because the program is intended to benefit low and moderate income households, federal law imposes maximum limits on the annual gross income of home buyers.
Purchase Price: Federal law also imposes limits on the purchase price of home financed under the program.
Principle Residence: The home buyer must occupy the home as a principal residence within a reasonable period which, under most circumstances, may not exceed 60 days after financing is provided. A principle residence is a home occupied primarily for the residential purposes and does not include a home used as an investment property, as a recreational home or a home in which 15 percent or more of its total area is used for a trade or business.
One to Four Family Home: Each residence financed must contain 1-4 units. A one family residence includes a detached home, one unit of a duplex, a townhouse or a condominium unit. If the residence is a 2-4 unit building, one unit of the residence must be the principal residence of the building owner and the residence must have been first occupied for residential purposes at least five years prior to applying for a mortgage loan financed in connection with the MCC.
New Mortgage: The mortgage loan financed in connection with a credit certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).
Program Area: In order to be eligible for a certificate, the home financed under the program must be located in the City of Chicago, Illinois.
Under this program, mortgage credit certificates will be issued to eligible home buyers on a first come, first served basis. The certificates are available in connection with any type of mortgage loan (except loans from a tax exempt bond programs), including fixed rate and adjustable rate mortgages.
If you have any questions regarding this program, or any other first time home buyer programs in Illinois, please email me at Tino.Muratore@gmail.com
Thank you,
Tino Muratore
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