| When purchasing a home you are creating a fantastic | | | | credit. The certificate will also list the certified |
| tax shelter for yourself. But for the most part, you will | | | | indebtedness amount on which the credit is figured. |
| find very little in the way of tax write offs during the | | | | The next important topic is some of the some tax |
| process of purchasing. If you live in the District of | | | | breaks that can assist in financing the purchase of a |
| Columbia, and are a first time home buyer, you may | | | | home. The 10% early distribution penalty for IRAs is |
| be eligible for a one time only tax credit. | | | | one of the tax breaks you get. This penalty is waived |
| The credit is up to $5,000, or $2,500 for those who are | | | | for withdrawals up to $10,000 in a lifetime that are |
| married but file separate returns. The definition of a | | | | used for first-time home buying expenses. |
| first time home buyer is an individual who has not had | | | | In this case, a first-time home buyer is a qualified |
| a present ownership interest in a residence (principal | | | | person-if the taxpayer (and if married, the taxpayer's |
| only), in the District of Columbia for the one year period | | | | spouse) had no present ownership interest in a |
| that ends on the date of purchase. | | | | principal residence during the two-year period ending |
| For those with modified adjusted gross income (MAGI) | | | | on the date of purchase. |
| over $70,000 if single, or $110,000 on a joint return, the | | | | The funds you withdraw must be used for qualified |
| credit is phased out. No credit may be claimed for | | | | acquisition costs no later than 120 days after |
| single filers with MAGI over $90,000, or married | | | | withdrawal. Qualified acquisition costs include the costs |
| couples filing jointly with MAGI over $130,000. You | | | | of acquiring, constructing or reconstructing a residence. |
| would use form 8396 for this credit and the amount of | | | | These include usual or reasonable settlement, financing |
| interest deductible as an itemized deduction must be | | | | or closing costs. |
| reduced by the amount of any credit. Also, the credit | | | | This article has briefly covered how to withdraw |
| applies only to property purchased before January 1, | | | | money from a retirement account and save the |
| 2004, unless Congress extends the credit. | | | | potential penalties as well as when a mortgage credit |
| Those who are low-income taxpayers may qualify for | | | | could be received. There are many other advantages |
| a mortgage interest credit, regardless of where they | | | | to home ownership which you should be aware of. |
| live. This credit is claimed annually by taxpayers who | | | | You should take the time to research this subject |
| continue to qualify for it. | | | | completely and educate yourself on all the |
| A qualified homeowner must receive a mortgage | | | | advantages. By doing so, you will truly make your |
| credit (MCC) certificate from the state or local | | | | home a fantastic tax shelter. |
| government showing the credit rate used to figure the | | | | |