| Few in this generation if any will remember a time | | | | dealing with housing. This tax credit will give an |
| when the government didn't have policies in place | | | | approved first time buyer in the housing market |
| to encourage home ownership. Home ownership is | | | | up to twenty percent for a federal tax credit. |
| the quintessential foundation of the American | | | | This means that the federal government will pay |
| dream. Therefore, the different incentive | | | | on a one to one basis of the dollars paid in the |
| programs offered by the government to | | | | federal income tax. So if the interest paid in one |
| encourage home ownership can almost be | | | | year is $20,000 then the federal government will |
| considered a religious right to most Americans in | | | | give the qualified first time home buyer a $4,000 |
| this era. | | | | dollar tax credit on their federal income taxes. All |
| The first tax shelter is the Mortgage Interest | | | | the rest of the money not paid or credited can |
| Deduction. All but the most expensive homes | | | | be included in the interest deduction from the |
| bought by the ultra wealthy can deduct all of the | | | | mortgage interest deduction. |
| interest they pay on their loan for their home. | | | | The next tax shelter a home buyer may find |
| The mortgage interest deduction is the most | | | | beneficial is the actually property taxes |
| common and the most known about tax shelter. | | | | themselves. A home buyer can write off all the |
| Because mortgage loans are so much higher than | | | | money spent on taxes from their actual income. |
| any other thing an average American will own, | | | | The government will not count the money used |
| they will want a while to pay back there loan, | | | | to pay the property taxes as an actual part of an |
| which means that each month a lot of interest is | | | | individual's income. It is important that the escrow |
| being paid to the banks. The government offering | | | | account used to hold the money for the property |
| to pay off the interest is a great incentive to buy | | | | tax is not used in the tax calculation that will be |
| a home knowing they will not have to lose a lot | | | | used the year after. |
| of money on the interest payments. Where this | | | | The final principle is the money gained by selling a |
| form of tax shelter gets tricky is the interest paid | | | | home. If a home is used as the primary source of |
| on a home equity loan. The government will only | | | | residence for over two years, the government |
| pay the interest on up to $100,000. | | | | will let the seller earn up to $250,000 in profits |
| The second form of tax shelter is the mortgage | | | | from the sell of the home. The selling tax shelter |
| tax credit. A mortgage tax credit is more geared | | | | allows a lot of money to be earned from buying, |
| towards first time buyers as they more often | | | | living, and then selling a home. Homes truly are |
| than not need the relief with the cash situation. | | | | one of the best investments most Americans will |
| To get a tax credit a home buyer will have to | | | | make in their lifetime. |
| get the proper approval from the local agency | | | | |