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Mayor Rahm Emanuel today introduced to City Council a housing assistance proposal that would authorize $75 million in new bond financing incentives for first-time homeowners.
"Helping residents become first-time homeowners is another important tool in our efforts to build stronger neighborhoods throughout Chicago," said Mayor Emanuel. “From the Neighborhood Opportunity Fund to Retail Thrive Zones to the Industrial Corridor Modernization Initiative, my administration remains focused on spurring economic development and neighborhood revitalization, and this initiative is another important step in achieving that goal.”
The incentives would be made available through the Department of Planning and Development’s (DPD) TaxSmart Mortgage Credit Certificate Program, which works with local lenders to provide an income tax credit for a portion of the interest on a borrower’s mortgage or home improvement loan. The 2019 funding round would assist approximately 400 homebuyers over the next three years.
Applied at tax time every year, the credit is equivalent to 25 percent of a homebuyer’s mortgage interest or 50 percent of an existing owner’s home improvement loan interest, resulting in a dollarfor-dollar reduction in federal income tax liability. Program participants are projected to receive credits up to $2,500 per year.
TaxSmart is authorized by the Internal Revenue Service and administered by DPD through a network of local mortgage lenders. To participate, applicants must be Chicago residents who qualify for a loan from a participating lender. Eligible properties must be between one and four units and serve as an applicant’s primary residence. Participants cannot have owned a home in the past three years, unless they are buying a home in a targeted area. Income and purchase price restrictions also apply.
Program participants still remain eligible for the standard itemized mortgage deduction on federal tax returns.
Since 2005, TaxSmart has helped more than 2,000 households purchase homes with mortgages valued at over $298 million.
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