New York Governor Offers New Tax Credit for Homebuyers

 

New York Governor David Paterson is suffering from record low approval ratings. This new tax credit may boost his image a few points.

The governor announced that New York will offer a federal income tax credit to first-time homebuyers to encourage home sales in the State. The New York State Mortgage Credit Certificate (MCC) will enable first-time homebuyers to claim a tax credit equal to 20% of their annual mortgage interest costs, potentially saving the average homebuyer about $1,500 each year. The program will effectively extend, and in some cases improve upon the federal government's $8,000 First-Time Homebuyer Credit enacted as part of the American Recovery and Reinvestment Act of 2009, which expires on November 30th.

"The best way to jump-start the housing market is to encourage home purchases by first-time homebuyers," Governor Paterson said. "The New York State Mortgage Credit Certificate will make it easier for first-time homebuyers to buy their first home and will help stimulate the State's economy. It also means some form of federal tax credit will be available for homebuyers even after the federal government's tax credit program expires in November."

The New York State Mortgage Credit Certificate (MCC) can be used to reduce a homebuyer's tax burden for every year the mortgage loan remains outstanding. With an MCC, 20% of the amount paid in mortgage interest becomes a tax credit that can be deducted, dollar for dollar, from a homeowner's federal income tax liability. The remaining 80% of the mortgage interest continues to qualify as an itemized tax deduction, as long as there is sufficient federal tax liability. The MCC will be administered by the State of New York Mortgage Agency (SONYMA), a State agency that offers a variety of fixed-rate mortgages tailored to the needs of first-time homebuyers.