Homebuyer Tax Credit Course

Transcription

1 Homebuyer Tax Credit Course January 2013

2 WELCOME TO NEW HAMPSHIRE HOUSING S ONLINE HOME START HOME BUYER TAX CREDIT PROGRAM TRAINING. THE HOME START HOME BUYER TAX CREDIT IS A VALUABLE TAX CREDIT THAT YOU MAY QUALIFY FOR WHEN APPLYING FOR A MORTGAGE. ELIGIBLE BORROWERS CAN RECEIVE THE HOME BUYER TAX CREDIT BY RECEIVING A MORTGAGE CREDIT CERTIFICATE, OR MCC, WHICH IS ISSUED BY NEW HAMPSHIRE HOUSING. THE HOME BUYER TAX CREDIT PROVIDES HOUSING ASSISTANCE TO LOW- AND MODERATE-INCOME FIRST-TIME HOME BUYERS BY ALLOWING AN ELIGIBLE BORROWER TO RECEIVE UP TO $2,000 PER YEAR, FOR THE LIFE OF THE LOAN, IN REDUCED FEDERAL INCOME TAX LIABILITY. THIS MEANS THE HOME BUYER TAX CREDIT COULD HELP YOU PAY LESS IN TAXES, BOOST YOUR TAKE-HOME PAY, AND AFFORD YOUR NEW HOME. FROM A LENDER S PERSPECTIVE THAT MEANS AN ELIGIBLE BORROWER MAY BE ABLE TO QUALIFY FOR A WIDER VARIETY OF HOMES. FROM A REAL ESTATE AGENT S PERSPECTIVE, IT MEANS AN ELIGIBLE BORROWER MAY BE ABLE TO PURCHASE THE HOME HE OR SHE WANTS. FROM YOUR PERSPECTIVE, IT IS AN IMPORTANT TAX BENEFIT THAT MAY HELP YOU REALIZE YOUR DREAM OF HOME OWNERSHIP. ALTHOUGH THIS PRESENTATION IS MEANT TO INFORM YOU ABOUT THE HOME BUYER TAX CREDIT PROGRAM, IT DOES NOT COVER ALL ASPECTS OF THE PROGRAM. FOR FULL DETAILS, YOU SHOULD REVIEW ALL HOME BUYER TAX CREDIT PROGRAM RELATED MATERIALS AND INFORMATION, INCLUDING PROGRAM RULES GOVERNING THE ISSUANCE OF MCCS, LOCATED ON THE SIDEBAR TO THE RIGHT OF THIS SCREEN. IN ADDITION, FOR YOUR BENEFIT, YOU WILL NOTICE WE HAVE INCLUDED SCROLL OVER DEFINITIONS FOR COMPLEX AND INDUSTRY SPECIFIC TERMS. THIS IS TO BETTER HELP YOU TO UNDERSTAND THE MATERIAL WE WILL BE COVERING. WITHIN INDIVIDUAL SLIDES, WE HAVE ALSO HIGHLIGHTED HYPERLINKED RESOURCES TO SPECIFIC FORMS AND DOCUMENTS. WHEN YOU CLICK ON THESE HYPERLINKS, IT WILL OPEN A NEW BROWSER WINDOW FOR YOU TO REVIEW THE MATERIAL. ONCE YOU HAVE REVIEWED THE DOCUMENT, SIMPLY CLOSE THAT BROWSER WINDOW TO RESUME THE COURSE. BE SURE NOT TO CLOSE THE BROWSER WINDOW THAT INCLUDES THE COURSE, OR YOU MAY NEED TO LOG BACK IN TO CONTINUE THE TRAINING. ONCE YOU COMPLETE THIS TRAINING YOU WILL BE GIVEN A CHANCE TO TEST YOUR KNOWLEDGE AND RECEIVE A CERTIFICATE OF COMPLETION. THIS CERTIFICATE OF COMPLETION IS REQUIRED TO PARTICIPATE IN THE HOME BUYER TAX CREDIT PROGRAM. SAVE THIS CERTIFICATE AND SHOW IT TO YOUR LENDER ONCE YOU ARE READY TO PURCHASE YOUR NEW HOME.

3 WHY NEW HAMPSHIRE HOUSING? IN ADDITION TO THE HOME BUYER TAX CREDIT, NEW HAMPSHIRE HOUSING OFFERS A NUMBER OF UNIQUE MORTGAGE PRODUCTS DESIGNED TO HELP LOW- AND MODERATE-INCOME BORROWERS ACHIEVE HOME OWNERSHIP. NEW HAMPSHIRE HOUSING S GREAT MORTGAGE LOAN PRODUCTS FEATURE: COMPETITIVE RATES AND NO HIDDEN FEES; LOW DOWNPAYMENT REQUIREMENTS; CASH FOR DOWNPAYMENT AND CLOSING COSTS; FREE HOME BUYER EDUCATION CLASSES; MONEY FOR PROPERTY RENOVATIONS IF YOU PURCHASE A FIXER-UPPER; OPTIONS FOR PRIVATE MORTGAGE INSURANCE AND GOVERNMENT INSURANCE; AND A DEDICATED GROUP OF PARTICIPATING LENDERS AND REAL ESTATE AGENTS TO HELP YOU BUY YOUR HOME. OUR GOAL IS SIMPLE. WE WANT TO HELP NEW HAMPSHIRE'S LOW- TO MODERATE-INCOME BUYERS ACHIEVE SUCCESSFUL HOME OWNERSHIP BY OFFERING AFFORDABLE MORTGAGE LOANS AND OTHER UNIQUE ASSISTANCE. TO LEARN MORE ABOUT NEW HAMPSHIRE HOUSING VISIT COM OR CALL US AT

4 WHAT YOU WILL LEARN WE WILL COVER: AN OVERVIEW OF THE HOME BUYER TAX CREDIT PROGRAM, INCLUDING: QUALIFYING FOR A HOME BUYER TAX CREDIT; ELIGIBLE PROPERTIES; ELIGIBLE MORTGAGES; EXAMPLES OF HOW A HOME BUYER TAX CREDIT MAY BENEFIT YOU; THE POTENTIAL OF RECAPTURE TAX; HOME BUYER TAX CREDIT FEES; AND THEN A REVIEW OF THE BENEFITS OFFERED BY THE HOME BUYER TAX CREDIT.. WHEN YOU ARE FINISHED, YOU WILL HAVE A BETTER UNDERSTANDING OF THE HOME BUYER TAX CREDIT PROGRAM. FEEL FREE TO GO BACK AND REVIEW THE TRAINING AS MUCH AS NEEDED. THE CONCEPTS CAN BE HARD TO UNDERSTAND THE FIRST TIME. IF YOU QUALIFY FOR THE HOME BUYER TAX CREDIT, YOU WILL WANT TO FULLY UNDERSTAND IT TO TAKE ADVANTAGE OF ITS BENEFITS. WHEN YOU FEEL YOU FULLY UNDERSTAND THE HOME BUYER TAX CREDIT, YOU CAN TAKE THE TEST AND RECEIVE YOUR CERTIFICATE OF COMPLETION. WHAT IS THE HOME BUYERTAX CREDIT? THERE ARE A FEW KEY POINTS TO CONSIDER ABOUT THE HOME BUYERTAX CREDIT PROGRAM: THE HOME BUYERTAX CREDIT CAN PROVIDE INCOME TAX SAVINGS TO LOW- AND MODERATE-INCOME FIRST-TIME HOME BUYERS. IT ALLOWS YOU TO SAVE MONEY BY TREATING SOME OF YOUR MORTGAGE INTEREST AS A CREDIT TOWARDS INCOME TAXES OWED. THE HOME BUYERTAX CREDIT IS GENERALLY MORE VALUABLE THAN A DEDUCTION. A DEDUCTION REDUCES TAXABLE INCOME, A CREDIT REDUCES TAXES OWED. LET ME SAY THAT AGAIN: A DEDUCTION REDUCES TAXABLE INCOME. A CREDIT REDUCES THE TAXES OWED. BECAUSE OF THE CREDIT, YOU MAY WANT TO REDUCE YOUR TAX WITHHOLDINGS, WHICH CAN BOOST YOUR TAKE-HOME PAY. THIS ALLOWS YOU TO USE YOUR TAX SAVINGS TO HELP PAY YOUR MORTGAGE. IN QUALIFYING YOU FOR A MORTGAGE, YOUR LENDER MAY CONSIDER THE TAX SAVINGS AS A BOOST TO YOUR INCOME, MAKING THE HOME MORE AFFORDABLE OR QUALIFYING YOU FOR A LARGER MORTGAGE AND A WIDER VARIETY OF HOMES!

5 HOW DOES THE HOME BUYER TAX CREDIT WORK? THE HOME BUYER TAX CREDIT IS A DIRECT DOLLAR-FOR-DOLLAR REDUCTION IN YOUR FEDERAL TAXES WORTH 10% TO 50% OF THE INTEREST YOU PAY ON YOUR MORTGAGE. YOU CAN ESTIMATE YOUR POTENTIAL SAVINGS BY USING THE FORMULA SHOWN. MULTIPLY THE MORTGAGE AMOUNT TIMES THE LOAN INTEREST RATE TO GET THE ANNUAL MORTGAGE INTEREST PAID THEN MULTIPLY THE ANNUAL MORTGAGE INTEREST PAID TIMES THE HOME BUYER TAX

6 HERE IS AN EXAMPLE OF THE FORMULA: (PAUSE FOR 3 COUNT) IN THIS EXAMPLE, YOU MAY BOOST YOUR TAKE HOME PAY BY ABOUT $167 A MONTH MONEY THAT YOU CAN USE TO PAY YOUR MORTGAGE! PLEASE NOTE, HOWEVER, THAT YOUR ANNUAL TAX CREDIT SAVINGS CANNOT EXCEED $2,000, AND YOU MUST HAVE A TAX LIABILITY TO CLAIM THE CREDIT. HOW TO QUALIFY FOR A HOME BUYERTAX CREDIT TO TAKE ADVANTAGE OF THE HOME BUYERTAX CREDIT, YOU, MUST OBTAIN A MORTGAGE CREDIT CERTIFICATE, AN MCC, FROM NEW HAMPSHIRE HOUSING. TO QUALIFY FOR A HOME BUYER TAX CREDIT YOU MUST: QUALIFY FOR THE LOAN THROUGH YOUR MORTGAGE LENDER S GUIDELINES; BE A FIRST-TIME HOME BUYER. THIS MEANS NOT OWNING A HOME WITHIN THE PRIOR THREE YEARS. IF YOU ARE NOT A FIRST-TIME HOME BUYER, YOU CAN STILL QUALIFY IF YOU PURCHASE A HOME IN A TARGETED AREA. BE PURCHASING A SINGLE-UNIT HOUSE LOCATED IN NEW HAMPSHIRE THAT WILL BE YOUR PRINCIPAL RESIDENCE. MEET THE HOME BUYER TAX CREDIT PROGRAM S INCOME AND PURCHASE PRICE LIMITS, WHICH CAN BE FOUND AS A LINK ON THE SIDEBAR OF THIS COURSE.

7 ELIGIBLE PROPERTIES PROPERTIES ELIGIBLE FOR THE HOME BUYER TAX CREDIT INCLUDE ANY SINGLE-UNIT HOME. THIS INCLUDES EXISTING OR NEW SINGLE-FAMILY HOMES, CONDOMINIUMS, MODULAR AND SOME MANUFACTURED HOMES. UNITS WITH MORE THAN ONE LIVING SPACE OR DWELLING ARE NOT ALLOWED--IN OTHER WORDS NO MULTI-FAMILY HOMES. AND THE SALE PRICE OF THE HOME CANNOT EXCEED THE PROGRAM S PURCHASE PRICE LIMITS. ELIGIBLE MORTGAGES ELIGIBLE MORTGAGES FOR THE HOME BUYER TAX CREDIT PROGRAM MUST BE FIXED-RATE, FULLY AMORTIZING MORTGAGES. THE HOME BUYER TAX CREDIT CANNOT BE USED WITH AN EXISTING MORTGAGE. IN OTHER WORDS, REFINANCE LOANS ARE NOT ELIGIBLE UNDER THE HOME BUYER TAX CREDIT PROGRAM. THE ORIGINAL CREDIT CAN ONLY BE ISSUED WHEN YOU FIRST PURCHASE YOUR HOME. ONCE YOU RECEIVE THE HOME BUYER TAX CREDIT, IF YOU REFINANCE YOUR HOME AT A LATER DATE, YOU MAY REQUEST TO HAVE THE CREDIT REISSUED WITH YOUR NEW LENDER S INFORMATION. IN ORDER TO QUALIFY, THE LOAN MUST MEET THE LENDER S UNDERWRITING CRITERIA. IN ADDITION, THE LOAN MUST BE EITHER GOVERNMENT-INSURED UNDER FHA, USDA/RD OR VA OR BE ELIGIBLE FOR SALE TO FANNIE MAE OR FREDDIE MAC. YOUR LENDER CAN EXPLAIN THIS REQUIREMENT IF YOU HAVE QUESTIONS. ADDITIONALLY, THE MAXIMUM LOAN TERM IS 30 YEARS. THERE ALSO MAY BE INTEREST RATE LIMITS FOR ELIGIBLE MORTGAGES. YOU MAY OBTAIN YOUR LOAN FROM ANY LENDER OF YOUR CHOICE. YOU ARE NOT REQUIRED TO OBTAIN THE LOAN FROM THE LENDER THAT IS PROVIDING THE MCC. OTHER ELIGIBLE MORTGAGE PROGRAMS AND CRITERIA MAY BE APPROVED BY NEW HAMPSHIRE HOUSING TO BE USED WITH THE HOME BUYER TAX CREDIT, BUT IT IS BEST TO CONTACT A PARTICIPATING MCC LENDER IF YOU HAVE QUESTIONS ABOUT PURCHASING A HOME AND RECEIVING A HOME BUYER TAX CREDIT. IF YOU WANT MORE SPECIFICS ABOUT THE HOME BUYER TAX CREDIT PROGRAM S QUALIFICATIONS, CLICK ON THE LINK TO REVIEW THE CURRENT HOME BUYER TAX CREDIT PROGRAM FACT SHEET.

8 HOME BUYERTAX CREDIT BENEFITS ONCE YOU HAVE AN MCC, YOU CAN USE YOUR HOME BUYER TAX CREDIT EACH YEAR, PROVIDED: 1. YOU PAID MORTGAGE INTEREST ON THE LOAN YOU TOOK OUT WHEN THE MCC WAS ISSUED; 2. YOU STILL LIVE IN THAT HOME AS YOUR PRINCIPAL RESIDENCE; 3. YOU FILE THE MCC ALONG WITH IRS FORM 8396 WHEN YOU DO YOUR TAXES; AND 4. YOU OWE TAXES. AS WAS MENTIONED PREVIOUSLY, AND EXPLAINED ON THE NEXT SLIDE, YOU CAN DO SOMETHING NOW TO BOOST YOUR TAKE-HOME PAY BY ADJUSTING YOUR TAX WITHHOLDING BASED ON THE PROJECTED TAX SAVINGS FROM USING THE HOME BUYER TAX CREDIT. TO REALIZE AN INCREASE IN INCOME, YOU CAN ADJUST YOUR FEDERAL INCOME TAX WITHHOLDING WITH YOUR EMPLOYER BY UPDATING YOUR W-4, ALSO KNOWN AS THE IRS EMPLOYEE S WITHHOLDING ALLOWANCE CERTIFICATE. ADJUSTING YOUR FEDERAL INCOME TAX WITHHOLDING MAY INCREASE YOUR MONTHLY TAKE- HOME PAY. WITH THE ADDITIONAL TAKE-HOME PAY, YOU CAN PUT MORE MONEY TOWARD YOUR MORTGAGE PAYMENTS, MAKING THE HOME MORE AFFORDABLE. SINCE THE HOME BUYER TAX CREDIT CAN POTENTIALLY BE USED EACH YEAR, IF IT IS ON THE ORIGINAL MORTGAGE AND THE PROPERTY REMAINS YOUR PRINCIPAL RESIDENCE, THE TAX CREDIT HAS THE POTENTIAL OF SAVING YOU THOUSANDS OF DOLLARS OVER THE LIFE OF THE LOAN. KEEP IN MIND THAT YOU ARE RESPONSIBLE FOR DETERMINING YOUR ACTUAL TAX BENEFIT, INCLUDING WHETHER YOU SHOULD ADJUST YOUR TAX WITHHOLDING. YOU ARE ENCOURAGED TO SEEK PROFESSIONAL TAX HELP WHEN DETERMINING THE ACTUAL BENEFIT OF THE HOME BUYER TAX CREDIT.

9 IMPORTANT HIGHLIGHTS THERE ARE SOME IMPORTANT TAKE-AWAYS TO REMEMBER ABOUT THE HOME BUYER TAX CREDIT: THE AMOUNT OF THE TAX CREDIT IS BASED ON A PERCENTAGE OF THE MORTGAGE INTEREST YOU PAY EACH YEAR. TO SEE THIS VISUALLY, LOOK AT THIS CHART. HERE, THE AMOUNT OF THE HOME BUYER TAX CREDIT IS EQUAL TO 35% OF THE ANNUAL MORTGAGE INTEREST PAID. THE HOME BUYER TAX CREDIT ONLY PROVIDES A BENEFIT IF YOU: OWE FEDERAL INCOME TAXES; AND INCLUDE THE MCC CERTIFICATE WHEN FILING YOUR TAX RETURNS. THE HOME BUYER TAX CREDIT IS NOT A REFUNDABLE CREDIT, MEANING IF YOU DO NOT OWE TAXES, THE CREDIT HAS NO VALUE THAT YEAR. THE PROGRAM S GOAL IS TO PROVIDE UP TO $2,000 A YEAR IN A TAX CREDIT THAT MAY ALLOW YOU TO BOOST YOUR TAKE-HOME PAY TO BETTER AFFORD YOUR HOME. HOWEVER, THE ACTUAL VALUE MAY DIFFER BASED ON YOUR SITUATION. THE REMAINING 65% OF THE ANNUAL MORTGAGE INTEREST PAID THAT IS NOT TAKEN AS A CREDIT MAY STILL BE ITEMIZED AS A DEDUCTION ON YOUR FEDERAL TAX RETURNS EACH YEAR.

10 IMPORTANT HIGHLIGHTS SOME MORE IMPORTANT TAKE-AWAYS TO REMEMBER ABOUT THE HOME BUYER TAX CREDIT ARE: IT MAY BE USED EACH TAX YEAR FOR AS LONG AS THE ORIGINAL MORTGAGE IS OUTSTANDING AND THE HOME REMAINS YOUR PRINCIPAL RESIDENCE. THE ACTUAL VALUE OF THE HOME BUYER TAX CREDIT, IF ANY, DEPENDS ON YOUR TAX SITUATION. IMPORTANT HIGHLIGHTS REMEMBER: ELIGIBLE BORROWERS SHOULD CONSULT WITH A TAX PROFESSIONAL ABOUT THE VALUE OF THE HOME BUYER TAX CREDIT. ALSO, THE HOME BUYER TAX CREDIT DEPENDS ON CONGRESS CONTINUING THE MCC PROGRAM AND CONTINUING TO ALLOW MORTGAGE INTEREST DEDUCTIONS. THE CREDIT DOES NOT REDUCE WHAT YOU ACTUALLY MUST PAY ON YOUR MORTGAGE. IT CAN, HOWEVER, PROVIDE MORE TAKE-HOME PAY THAT CAN BE APPLIED TOWARD MORTGAGE PAYMENTS.

11 MCC PROGRAM EXAMPLE YOU VE HEARD A LOT ABOUT THE DETAILS BEHIND THE HOME BUYER TAX CREDIT. NOW, LET S LOOK AT THE POTENTIAL BENEFIT OF THE HOME BUYER TAX CREDIT OVER TIME. HERE S AN EXAMPLE. IN THIS EXAMPLE, YOU ARE PURCHASING A HOME FOR $150,000. THE LOAN INTEREST RATE IS 5%. BASED ON THE INTEREST RATE AND LOAN AMOUNT, THE FIRST YEAR S MORTGAGE INTEREST PAID WILL BE $7,450. BECAUSE YOU HAVE AN MCC, YOU ARE ALLOWED TO TAKE A TAX CREDIT EACH YEAR EQUAL TO THE AMOUNT OF THE HOME BUYER TAX CREDIT RATE TIMES THE ANNUAL INTEREST PAID. THE HOME BUYER TAX CREDIT RATE IN THIS EXAMPLE IS 35%. RECAPTURE TAX THE HOME BUYER TAX CREDIT PROVIDES A UNIQUE FEDERAL TAX BENEFIT TO THE HOME BUYER. THIS BENEFIT CONSTITUTES A FEDERAL SUBSIDY TO THE ELIGIBLE BORROWER. THEREFORE, IF YOU OBTAIN AN MCC, YOU MUST KNOW THAT YOU MAY BE SUBJECT TO WHAT IS CALLED A FEDERAL RECAPTURE TAX, WHICH AIMS TO RECAPTURE THE FEDERAL SUBSIDY UNDER CERTAIN LIMITED SITUATIONS. WHILE YOU SHOULD CONSIDER RECAPTURE, YOU SHOULD KNOW THE RECAPTURE TAX IS DUE ONLY IF YOU: 1) SELL THE HOME WITHIN THE FIRST NINE YEARS OF OWNERSHIP; 2) ARE EARNING SIGNIFICANTLY MORE INCOME AT THE TIME OF SALE THAN YOU EARNED WHEN THE HOME BUYER TAX CREDIT WAS ISSUED: AND 3) HAVE A GAIN FROM THE SALE OF THE HOME. THE RECAPTURE TAX IS AN IRS REQUIREMENT. FOR MORE INFORMATION, PLEASE REVIEW THE RECAPTURE BROCHURE AND SEE IRS FORM 8828, WHICH ARE INCLUDED AS LINKS ON THE SIDEBAR OF THIS TRAINING. IN THE GRAPH TO THE RIGHT OF THE CALCULATOR, YOU WILL NOTICE TWO LINES, A RED LINE AND A BLUE ONE. THE RED LINE REPRESENTS INTEREST PAID OVER THE LIFE OF THE MORTGAGE. OVER TIME, AS YOU PAY DOWN YOUR MORTGAGE, IT DECLINES. THE BLUE LINE SHOWS THE POTENTIAL VALUE OF THE CREDIT OVER TIME. AS YOU CAN SEE, IT IS LEVEL FOR SEVERAL YEARS, THEN, LIKE YOUR MORTGAGE INTEREST PAID, IT DECLINES. THE PERIOD OF TIME WHERE THE BLUE LINE IS LEVEL REPRESENTS YOU RECEIVING THE MAXIMUM ALLOWABLE CREDIT AMOUNT OF $2000. SO, IN THIS EXAMPLE, FOR THE FIRST YEAR, YOU MAY BE ABLE TO RECEIVE THE MAXIMUM HOME BUYER TAX CREDIT BENEFIT OF $2,000. AND AS YOU CAN SEE, OVER TIME, YOU MAY STILL CLAIM THE CREDIT AS A PERCENTAGE OF YOUR ANNUAL MORTGAGE INTEREST PAID, POTENTIALLY SAVING YOU THOUSANDS OF DOLLARS OVER THE LIFE OF THE MORTGAGE. REMEMBER THAT YOUR ANNUAL TAX CREDIT SAVINGS CANNOT EXCEED $2,000. YOU ALSO MUST HAVE A TAX LIABILITY IN ORDER TO CLAIM THE HOME BUYER TAX CREDIT.

12 HOME BUYER TAX CREDIT CALCULATOR TO SEE THE POTENTIAL VALUE OF YOUR HOME BUYER TAX CREDIT OVER TIME, USE THE HOME BUYER TAX CREDIT CALCULATOR. THE FIGURES IN THE CALCULATOR REPRESENT WHAT YOU MAY RECEIVE IN YEAR ONE ONLY. THE GRAPH, HOWEVER, AS ON THE PREVIOUS SLIDE, SHOWS WHAT THE BENEFIT MAY BE OVER TIME. AGAIN THE RED LINE ON THE GRAPH REPRESENTS YOUR INTEREST PAID OVER THE LIFE OF THE MORTGAGE AND THE BLUE LINE REPRESENTS THE POTENTIAL HOME BUYER TAX CREDIT AMOUNT YOU MAY CLAIM OVER TIME. KEEP IN MIND THE MAXIMUM ALLOWABLE CREDIT AMOUNT IS $2000. TO SEE WHAT THIS BENEFIT MAY LOOK LIKE FOR YOU, INPUT A LOAN AMOUNT, INTEREST RATE AND TERM IN THE CALCULATOR PRE-HOME BUYER TAX CREDIT OKAY, SO NOW LET S LOOK AT HOW THE HOME BUYER TAX CREDIT IS REPORTED TO THE IRS. IT IS IMPORTANT TO REMEMBER THAT TO TAKE ADVANTAGE OF THE HOME BUYER TAX CREDIT, YOU MUST HAVE AN MCC, COMPLETE IRS TAX FORM 8396 AND FILE IT WITH YOUR ANNUAL TAX RETURN. IN ADDITION, THE HOME BUYER TAX CREDIT CAN ONLY BE CLAIMED AGAINST EXISTING TAX LIABILITY. IN THIS EXAMPLE, A SINGLE INDIVIDUAL, HAPPY HOME BUYER, WITH AN INCOME OF $60,000 PER YEAR, HAS FILED IRS TAX FORM SINCE MR. HOME BUYER HAS A HOME BUYER TAX CREDIT, HE WILL CLAIM THE CREDIT BY FILING IRS TAX FORM 8396 ALONG WITH THE 1040 FORM. IN THIS EXAMPLE THERE ARE TWO COLUMNS. THE COLUMN TO THE LEFT, THAT IS NOT HIGHLIGHTED, REPRESENTS SOMEONE COMPLETING THIS TAX FORM WITHOUT A HOMBUYER TAX CREDIT. THE HIGHLIGHTED COLUMN TO THE RIGHT, REPRESENTS COMPLETING THIS FORM WITH THE BENEFIT OF THE HOME BUYER TAX CREDIT. MR. HOME BUYER HAS ALSO CHOSEN NOT TO ITEMIZE DEDUCTIONS AND INSTEAD WILL CLAIM THE STANDARD DEDUCTION.

13 FORM 8396 MR. HOME BUYER S HOME BUYER TAX CREDIT IS CALCULATED OFF THE PERCENTAGE OF MORTGAGE INTEREST HE PAID DURING THE TAX YEAR. FROM FORM 8396 YOU CAN SEE THAT MR. HOME BUYER PAID $6,748 IN MORTGAGE INTEREST THIS YEAR. THE RATE OF THE HOME BUYER TAX CREDIT MR. HOME BUYER RECEIVED WAS 35%. BASED ON MORTGAGE INTEREST PAID, MR. HOME BUYER CALCULATES 35% OF THE MORTGAGE INTEREST TO BE $ , BUT THE PROGRAM HAS A LIMIT OF $2,000. THEREFORE, MR. HOME BUYER MAY TAKE THE MAXIMUM CREDIT AMOUNT OF $2000 AS A TAX CREDIT ON HIS FORM POST-HOMEBUYER TAX CREDIT AS YOU CAN SEE FROM LINE 55 ON PAGE TWO OF FORM 1040, THE USE OF THE HOME BUYER TAX CREDIT RESULTS IN A DECREASE IN TAX LIABILITY OF $2000 FOR MR. HOME BUYER. THIS MEANS THAT MR. HOME BUYER GETS TO KEEP MORE OF HIS HARD EARNED INCOME. TO INCREASE MR. HOME BUYER S MONTHLY TAKE-HOME PAY, MR. HOME BUYER SHOULD ADJUST HIS W-4, OR EMPLOYEE S WITHHOLDING ALLOWANCE CERTIFICATE, WITH HIS EMPLOYER. THIS WOULD ALLOW HIM TO RECEIVE THIS BENEFIT MONTHLY AS AN INCREASE IN TAKE-HOME PAY.

14 TO COVER THE COSTS OF ADMINISTERING THE HOME BUYER TAX CREDIT PROGRAM, YOU MAY HAVE TO PAY CERTAIN FEES TO THE PARTICIPATING MCC LENDER AND TO NEW HAMPSHIRE HOUSING. WE KNOW FEES CAN BE TOUGH TO PAY, BUT REMEMBER: A HOME BUYER TAX CREDIT CAN PROVIDE TAX SAVINGS OF UP TO $2,000 EACH YEAR TO HELP YOU AFFORD YOUR HOME. THAT COULD MEAN SAVING THOUSANDS OF DOLLARS OVER THE LIFE OF THE LOAN. PROGRAM-SPECIFIC FEES FOR NEW HAMPSHIRE HOUSING S HOME START HOME BUYER TAX CREDIT PROGRAM CAN BE FOUND IN THE SIDEBAR. PLEASE UNDERSTAND THAT FEES ASSOCIATED WITH THE HOME BUYER TAX CREDIT PROGRAM ARE NONREFUNDABLE, EVEN IF YOU CANNOT OR DO NOT USE THE HOME BUYER TAX CREDIT. TAKING THE NEXT STEP TO SEE IF YOU QUALIFY FOR THE HOME BUYER TAX CREDIT, CONTACT A PARTICIPATING MCC LENDER. WHILE TALKING TO YOU PARTICIPATING MCCC LENDER ASK THEM ABOUT THE BENEFITS OF COMBINING THE HOME BUYER TAX CREDIT WITH THE OTHER GREAT PROGRAMS OFFERED BY NEW HAMPSHIRE HOUSING. BY COMBINING YOUR HOME BUYER TAX CREDIT, WITH A NEW HAMPSHIRE HOUSING FIRST MORTGAGE YOU MAY BE ABLE TO RECEIVE OTHER ADDITIONAL ADVANTAGES, AS WELL AS A GREAT MORTGAGE PRODUCT. YOU CAN ALSO CONTACT NEW HAMPSHIRE HOUSING DIRECTLY FOR INFORMATION ON QUALIFYING FOR THE HOME BUYER TAX CREDIT AND ABOUT OUR MORTGAGE PROGRAMS. AS YOU USE THE CALCULATOR, REMEMBER THAT THE DEGREE TO WHICH IT CAN PROVIDE ASSISTANCE IS TOTALLY DEPENDENT UPON THE EXTENT TO WHICH YOU HAVE FEDERAL TAX LIABILITY THAT CAN BE OFFSET BY THE CREDIT. REMEMBER THE CALCULATOR AND GRAPH ARE FOR INFORMATIONAL PURPOSES ONLY, NOT A GUARANTEE OF THE ACTUAL VALUE OF THE CREDIT.

15 TAX CREDIT REVIEW BEFORE WE END, LET S REVIEW THE BENEFITS AND CONSIDERATIONS OF THE HOME BUYER TAX CREDIT. THE HOME BUYER TAX CREDIT MAY PROVIDE REAL BENEFIT BY: REDUCING YOUR TAXES OWED; BOOSTING YOUR INDIVIDUAL TAKE-HOME PAY; HELPING YOU TO QUALIFY FOR YOUR NEW HOME; AND PROVIDING YOU WITH MORE MONEY TO AFFORD YOUR NEW HOME. BENEFITS REVIEW KEEP IN MIND THAT THE HOME BUYER TAX CREDIT CAN BE MORE VALUABLE THAN STANDARD MORTGAGE INTEREST DEDUCTIONS. THIS IS BECAUSE A TAX CREDIT ENTITLES A TAXPAYER TO SUBTRACT THE AMOUNT OF THE CREDIT FROM THEIR TOTAL FEDERAL INCOME TAX LIABILITY, RECEIVING A DOLLAR FOR DOLLAR SAVINGS. THE INTENT OF THE CREDIT IS THAT YOU CAN INCREASE YOUR TAKE HOME PAY BY ADJUSTING YOUR W-4 WITH YOUR EMPLOYER. THIS INCREASE IN INCOME OR CAPACITY ALLOWS YOU TO QUALIFY FOR A WIDER VARIETY OF HOMES AT THE TIME OF APPLICATION OR MAKE YOUR MORTGAGE PAYMENT MORE AFFORDABLE. THE HOME BUYER TAX CREDIT IS VALID FOR THE LIFE OF THE LOAN, AS LONG AS YOU REMAIN THE PRIMARY OCCUPANT OF THE RESIDENCE. TO TAKE ADVANTAGE OF THE HOME BUYER TAX CREDIT, YOU MUST FILE IRS FORM 8396 WITH YOUR ANNUAL FEDERAL TAX RETURN. ANY UNUSED PORTION OF THE CREDIT MAY BE CARRIED FORWARD FOR UP TO 3 YEARS. IF YOU RECEIVE A HOME BUYER TAX CREDIT, AND THEN WANT TO REFINANCE IN THE FUTURE, THE CREDIT MAY BE REISSUED UNDER CERTAIN CIRCUMSTANCES. CONTACT NEW HAMPSHIRE HOUSING FOR MORE DETAILS. AFTER UTILIZING THE HOME BUYER TAX CREDIT, THE TAX CREDIT HOLDER CAN STILL DEDUCT THE REMAINING BALANCE OF THEIR MORTGAGE INTEREST PAID ON THEIR TAX RETURN.

16 HOW DO YOU QUALIFY FOR THE PROGRAM? REMEMBER, TO QUALIFY YOU MUST MEET THE FOLLOWING CONDITIONS: 1) YOU MUST QUALIFY FOR THE LOAN THROUGH YOUR MORTGAGE LENDER S UNDERWRITING GUIDELINES. BE SURE TO ASK YOUR LENDER ABOUT COMBINING YOUR HOME BUYER TAX CREDIT WITH NEW HAMPSHIRE HOUSING S GREAT MORTGAGE PROGRAMS, INCLUDING CASH ASSISTANCE FOR DOWNPAYMENT AND CLOSING COSTS; 2) YOU ARE A FIRST-TIME HOME BUYER, MEANING YOU HAVE NOT OWNED A HOME WITHIN THE PAST THREE YEARS, OR YOU ARE PURCHASING A HOME IN A TARGETED AREA; 3) YOU ARE BUYING A SINGLE-UNIT HOUSE IN NEW HAMPSHIRE THAT WILL BE YOUR PRINCIPAL RESIDENCE; 4) YOU MEET THE HOME BUYER TAX CREDIT INCOME AND PURCHASE PRICE LIMITS, WHICH CAN BE FOUND AS A LINK ON THE SIDEBAR OF THIS COURSE; AND FINALLY, 5) YOU ARE WILLING AND ABLE TO PAY CERTAIN REQUIRED FEES, IF APPLICABLE, IN ORDER TO OBTAIN THE HOME BUYER TAX CREDIT. IF YOU MEET THESE CRITERIA, CONTACT A PARTICIPATING MCC LENDER OR NEW HAMPSHIRE HOUSING FOR DETAILS. A LIST OF PARTICIPATING MCC LENDERS CAN BE FOUND IN THE SIDEBAR. KEEP IN MIND THAT NEW HAMPSHIRE HOUSING MAKES NO PROMISE, NO REPRESENTATION AND NO WARRANTY TO ANY PARTY, INCLUDING ANY HOME BUYER OR ANY LENDER. SPECIFICALLY, NEW HAMPSHIRE HOUSING MAKES NO PROMISE, NO REPRESENTATION AND NO WARRANTY ABOUT THE ACTUAL BENEFIT A HOME BUYER TAX CREDIT OR MCC MIGHT PROVIDE TO A SPECIFIC HOME BUYER. EACH HOME BUYER S SITUATION IS DIFFERENT, AND HOME BUYERS SHOULD NOT RELY ON ANY MATERIAL FROM OR COMMUNICATION WITH NEW HAMPSHIRE HOUSING OR WITH A LENDER. HOME BUYERS SHOULD FIRST BECOME FULLY INFORMED ABOUT THE HOME START HOME BUYER TAX CREDIT PROGRAM, AND THEN, WITH THEIR OWN TAX ADVISOR, THE HOME BUYER SHOULD DECIDE IF A HOME BUYER TAX CREDIT OR MCC PROVIDES ANY BENEFIT. REMEMBER, THIS PRESENTATION MAY NOT COVER ALL ASPECTS OF THE MCC PROGRAM REQUIREMENTS. FOR FULL DETAILS WE ENCOURAGE YOU TO REVIEW ALL MCC PROGRAM RELATED INFORMATION AND RULES IN THE SIDEBAR. ARE YOU READY TO TAKE ADVANTAGE OF THE HOME START TAX CREDIT PROGRAM? NOW IS THE TIME TO FIND OUT. CLICK TAKE THE TEST TO DEMONSTRATE WHAT YOU HAVE LEARNED ABOUT THE HOME BUYER TAX CREDIT PROGRAM. ONCE YOU HAVE COMPLETED THE SHORT TEST, YOU LL HAVE THE OPPORTUNITY TO PRINT OUT, OR TO YOUR LENDER, A CERTIFICATE OF COMPLETION. IF YOU ARE NOT YET READY TO WORK WITH A LENDER, HOLD ON TO THE CERTIFICATE FOR YOUR FUTURE NEEDS. IF YOU ARE NOT READY TO TAKE THE TEST, WE ENCOURAGE YOU TO GO BACK AND REVIEW THE CONTENT THAT YOU DO NOT FEEL COMFORTABLE ABOUT. PLEASE NOTE THAT IF YOU HAVE NOT ALREADY REGISTERED, YOU MUST REGISTER TO BE ABLE TO TAKE THE TEST. CONGRATULATIONS AND GOOD LUCK ON YOUR PATH TO HOME OWNERSHIP.

17 New Hampshire Housing Finance Authority 32 Constitution Drive, Bedford, NH Tel: (800) web: