Delaware First-Time Homebuyer Credit

By technogoober | March 9, 2020

Delaware First-Time Homebuyer Credit

Did you know that Delaware offers a credit to first-time homebuyers and that the credit is taken at the federal level?

The Delaware State Housing Authority (create link to website) created the Delaware First-Time Homebuyer Tax Credit under authority granted by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to low and moderate-income homebuyers.

The DE Tax Credit is a non-refundable federal income tax credit designed to assist persons of low to moderate-income to better afford homeownership. The DE Tax Credit holder is eligible to claim a portion of the annual interest paid on the mortgage as a special tax credit, not to exceed $2,000, during each year that they owe amounts on their mortgage loan and occupy the home as their principal residence.

With the DE Tax Credit, you can reduce your federal income tax liability by 35% of interest paid up to $2,000 for that year.

Applicants who receive a DE Tax Credit may be subject to a Recapture Tax if they sell the residence within nine years.

How to Apply

  • The homebuyer must apply for the DE Tax Credit through a participating lender. The homebuyer should apply for the DE Tax Credit at the same time he or she makes a formal application for a mortgage loan.

Eligibility

  • Homebuyer must purchase a home within Delaware.
  • The applicant cannot have had an ownership interest in a Principal Residence at any time during the three-year period prior to the date the mortgage to which the DE Tax Credit relates is executed.
  • Homebuyer’s household income and the purchase price must not exceed the maximum limits set by the Program.
  • Homebuyer must intend to occupy the home as his or her primary residence.
  • Homebuyer must use an approved lender and sign DE Tax Credit affidavit when they purchase their home.

Our office has experience with the Delaware First-Time Homebuyer Credit. Whether you are looking for more information regarding the Credit or need assistance with preparing your tax return utilizing the Credit, we are here to help. Please call our office today to set up an appointment.

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