5. Mortgage Interest Credit
If mortgage interest deduction sounds good to you, how about mortgage interest credit? This type of credit is available to lower-income Americans who want to purchase a home. The mortgage interest credit typically ranges from 10 percent to 50 percent of mortgage interest that was paid during the year.
However, if the credit rate is actually higher than 20 percent, you’ll be limited to only $2,000. So, to claim a mortgage interest credit, you’ll have to complete Form 8396 and add it to your 1040. You’ll also have some restrictions along the way. For example, if you decide to claim the mortgage interest credit, you must minimize your mortgage interest deduction mentioned on Schedule A by the credit amount.
On top of that, if you want to sell your home within nine years, all those benefits received from the Mortgage Credit Certificate program must be paid.
