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Understanding the Mortgage Credit Certificate Program

The Mortgage Credit Certificate Programs which are also known as MCC, allows homebuyers to claim a tax credit for a percentage of their paid mortgage interest each year.  It is a dollar-for-dollar reduction against your federal tax liability.

Who is Eligible:

  • Homebuyers who have not owned a home within the past three years.
  • You do not exceed the income and home purchase price limits.
  • You meet the lender qualification for a mortgage loan.
  •  You will occupy the home as your primary residence.

How Much of a Credit Can You Claim?

  • The amount of annual tax credit can range from 10 to 50 percent of the annual mortgage interest you pay each year.
  • The annual tax credit cannot exceed the lesser of $2,000 or your annual federal tax liability.
  • Each State/Local jurisdiction has MCC percentage and income/price limits.

Here is a sample MCC calculation that shows how this works:

$200,000 (mortgage amount) x 4 percent (mortgage interest rate) x 20 percent (MCC percentage)
= $1,600 (eligible credit amount)

Thus, the borrower would be able to claim $1,600 in credit on his or her annual tax return.

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