MCC Program

What?

The Mortgage Credit Certiifcate (MCC) Program is a little-known tax credit for first-time home buyers.  The MCC program may enable first-time home buyers convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on this U.S. individual income tax returns.

An MCC is NOT a mortgage. This is a tax credit

How it works

An MCC holder is able to claim up to 20% of annual mortgage interest paid as a federal income tax credit. The remaining mortgage interest (80%) continues to qualify as an itemized deduction. For example, a borrower with a $150,000 loan at 4% will pay $6,000 mortgage interest the first year. Twenty percent of this, or $1,200, can be a dollar-for-dollar reduction of federal income taxes! This tax credit continues at 20% of mortgage interest paid each year, as long as the home is owner-occupied. The MCC may even be re-issued, in the event the home is refinanced.

Federal eligibility requirements are identical to the MBOH loan program, and include

Income limits

2017 limits range from $62,600 to $99,680 based on household size and location. Spending limits: Current spending limits range from $253,809 to $401,177 based on location. First-time home buyer: Someone who has not owned their home for past three years.

Exceptions

Some veterans; prior ownership of mobile home on a rented lot; and purchasing a home in certain targeted areas

Owner occupancy

The MCC is valid for the life of the loan, if owner-occupied

Business Use Limits

Trade or business use of a residence can not exceed 15 percent. 

*In certain situations a recapture tax may apply. Ask your loan officer for more details.

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