Note: As of January 5, 2017, the FirstHomes Tax Credit program has been temporarily suspended until further allocation of funding.
Tax benefits for homeowners
The FirstHomes Tax Credit is not a loan. It is a tax credit – claimed by borrowers on their federal tax return annually. The credit is equal to 20% of the total mortgage interest amount paid – up to $2,000 each year.
The remaining mortgage interest that a borrower pays each year can be claimed as an itemized tax deduction, further reducing the homeowner’s federal tax liability.
Credit can be claimed yearly
The tax credit can be claimed for the life of the mortgage, as long as the borrower continues to live in the home. This allows a borrower’s savings to really add up over time.
First-time homebuyers borrowing through Rhode Island Housing or a FirstHomes Tax Credit Approved Lender are eligible to apply for this credit. The credit is also available to non first-time homebuyers purchasing in select areas of Providence, Pawtucket, Central Falls and Woonsocket. The borrower must own and occupy the home as their principal residence.
Maximum Purchase Price
The FirstHomes Tax Credit can be used for homes with a maximum purchase price of $407,195 for a one- to four-family home or eligible condominium.
To be eligible for the FirstHomes Tax Credit, your total annual household income must be less than $89,280 (for a 1-2 person household) or $104,160 (for a 3+ person household).
The FirstHomes Tax Credit can be used in conjunction with a Rhode Island Housing FirstHomes mortgage, or with a mortgage offered by a FirstHomes Tax Credit Approved Lender. While administered by Rhode Island Housing, the FirstHomes Tax Credit program is available to all lending institutions, so contact a FirstHomes Tax Credit Approved Lender today for more details. This tax credit is available for select loan products.