Kay, 404-298-5500, Georgia Mortgage Consultant



As I explain how the new tax credit provides incentives for Georgia first-time home buyers, I often find myself explaining the differences between a tax credit and a tax deduction.

How is a tax credit different from a tax deduction?
A tax deduction decreases your taxable income, while a tax credit decreases your overall taxes and may lead to you getting money from the IRS.

Here's an example:
Taxable Income: $60,000
Taxes Owed: $1,000

The effects of a $5,000 tax deduction:
Taxable Income: $55,000
Taxes Owed: (computed based on $55,000 taxable income).

The effects of a $5,000 tax credit
Taxable Income: $60,000
Taxed Owed: $0
Money in your pocket: $4,000

Read all articles about ways new housing bill (HR 3221) affects Georgia home buyers.

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Posted by Kay, Georgia Mortgage Consultant and VA Loan Specialist.
404.298.5500
25+ years' banking and finance experience.

Helping residents of Lithonia, Dekalb County, and all of Georgia with their mortgage financing needs since 1998.
Specialties: VA Mortgages, GA Relocation Mortgages.

Not meant to be tax, financial or legal advice. Please consult a professional for information about your specific situation.