TaxSmart Mortgage Credit Certificate

TaxSmart is a Mortgage Credit Certificate (MCC) program that provides a federal income tax credit to qualified homebuyers. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive an MCC to reduce income taxes by an amount equal to 20% of the interest paid on a mortgage. The tax credit may be claimed each year the home buyer continues to live in a home financed under this program.

Federal law requires that a home buyer satisfy each of the following guidelines:

• First-Time Homebuyer or Target Area Purchase
  Any person who has not owned a principal residence at any time during the three years prior to closing a loan under this program is considered a first-time home buyer. Non first-time home buyers are also eligible if they purchase a home in a designated target area. (See target area map below.)
  
• Income
  Because the program is intended to benefit low- and moderate-income households, federal law imposes maximum limits* on the annual gross income of home buyers.
  
• Purchase Price
  Federal law also imposes limits on the purchase price** of homes financed under the program.
  
• Principal Residence
  The home buyer must occupy the home as a principal residence within a reasonable period which, under most circumstances, may not exceed 60 days after financing is provided. A principal residence is a home occupied primarily for residential purposes and does not include a home used as an investment property, as a recreational home or a home in which 15 percent or more of its total area is used for a trade or business.
  
• One-to-Four-Family Home
  Each residence financed must contain 1-4 units. A one-family residence includes a detached home, one unit of a duplex, a townhouse or a condominium unit. If the residence is a 2-4 unit building, one unit of the residence must be the principal residence of the building owner and the residence must have been first occupied for residential purposes at least five years prior to applying for a mortgage loan financed in connection with the MCC.
  
• New Mortgage
  The mortgage loan financed in connection with a credit certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).
  
• Program Area
  In order to be eligible for a certificate, the home financed under the program must be located in the City of Chicago.

Under this program, mortgage credit certificates will be issued to eligible home buyers on a first-come, first-served basis. The certificates are available in connection with any type of mortgage loan (except loans from tax-exempt bond programs), including fixed rate and adjustable rate mortgages.

** Note ** First-time homebuyers must receive pre-purchase counseling to be eligible and must provide a Certificate of Completion of pre-purchase counseling with their applications. This description is only a summary of the requirements of the TaxSmart program. Applications and additional information are available from participating TaxSmart Mortgage Lenders.

Income Limits Non-Target Area Target Area 1 person household $60,320 $72,384 2 person household $75,400 $90,480 3+ person household $86,710 $105,560

Purchase Price Limits** Existing New Construction 1 Unit Non-Target $325,894 $325,894 1 Unit Target $398,315 $398,315 2 Unit Non-Target $367,060 not eligible 2 Unit Target $448,629 $448,629 3 Unit Non-Target $445,960 not eligible 3 Unit Target $545,063 not eligible 4 Unit Non-Target $514,570 not eligible 4 Unit Target $628,919 not eligible

**Purchase price limits are periodically adjusted and do not apply to mortgage credit certificates issued with respect to qualified home improvement loans.