In the state of New York first time buyers will receive more financial help. Governor Paterson announced on September 1 that New York will offer a federal income tax credit. The NYS Mortgage Credit Certificate (MCC) will enable first time buyers to claim a tax credit equal to 20% of their annual mortgage interest costs, potentially saving the average home buyer about $1,500. each year.
MCC can be used to reduce a home buyer'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 than can be deducted, dollar for dollar, from a homeowner's federal income tax liability.
$150,000 purchase at 5.25%- principal and interest= $829.50
$829.50 x 360 months = $298,620.00
$298.620 - 150,000 purchase price = $148,620 interest
Tax credit over life of loan equals 20% of interest
20% of $148,620 = $29,724 income tax credit
For more information consult with your mortgage lender or REALTOR.