Is There a State Tax Credit?
Currently there is no MN State Tax Credit for First Time Home Buyers.
This is often confused with the Obama Federal Tax Credit for First Time Buyers under the 2009 Stimulus Act. I have gotten repeated phone calls and emails lately from people who want to know how much the state tax credit is.
The Federal Tax Credit is $8,000 and is refundable, which means if you were going to owe $2,000 in Federal Income Tax, the credit would take care of that $2,000 and then you would get a refund of the remaining $6,000.
If you were going to receive a credit of $2,000 already, then the tax credit would be added onto that amount and you’d actually get $10,000 total in your Income Tax Refund. Pretty cool, huh?
Remember that this is money coming from the Internal Revenue Service (IRS) and not the Lender, Real Estate Broker, or Seller. You have to file the paperwork with the IRS in order to receive the payment, but not until after you close on the property.
Also note that FHA has said they will allow the Anticipated Tax Credit to be used as Down Payment money for buyers, but the money has to be borrowed from a non-profit or government agency in order to do so, and currently no one in MN is doing this. So you’ll have to wait until after you buy the house to receive the Tax Credit funds.
Bottom line is that there is no state tax credit (at least not in Minnesota).
There are several down payment and fix-up money programs that we have access to in the state and local areas, which is often what people confuse the term “tax credit” with.
If you’d like to learn more about those programs or the $8,000 credit, sign up for our next First Time Home Buyer’s Class and we will get you informed.
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