Clay County
Mortgage Credit Certificate Program
Please speak with your tax advisor or tax professional or tax preparer to determine your estimated tax liability and the value of the MCC. The following information is for informational purposes only and does not constitute professional tax advice.
What is the mortgage credit certificate, MCC for short.
Let’s start with the basics. The Mortgage Credit Certificate is not a down payment assistance program. The MCC program provides a federal tax credit each year you live in the home that will reduce the amount of federal income tax paid. And the borrower may claim the MCC each year the home remains their principal residence. The MCC is a very powerful subsidy that a homeowner may claim each year they live in the home.
What’s the benefit of the MCC Tax Credit? There are certain tax benefits to being a homeowner, such as annually homeowners may claim mortgage interest paid on primary residence as a tax deduction. The MCC allows 20% of mortgage interest paid to become a tax credit. The remaining mortgage interest paid remains a tax deduction.
A deduction is subtracted from the adjusted gross income before federal income taxes computed. A tax credit is subtracted from the total federal income tax liability and provides dollar for dollar reduction of liability limited to the homeowner’s tax liability.
What's the different between a Tax Deduction and a Tax Credit? First let’s look at the difference between a tax credit and a tax deduction. This is where most people do not understand the power of a tax credit. In General, tax credits tend to be more valuable compared to deductions. That’s because a tax credit is a dollar-for-dollar reduction of the income tax owed. For example is a tax credit and tax deductions are both valued at $1,000 and the homeowner tax liability is $3,000 here is how the $1,000 would be applied for each.
A tax credit worth $1,000 would be subtracted from the tax liability of $3,000 leaving a $2,000 tax bill. This is a dollar-for dollar reduction.
A tax deduction works differently and that is because you need to take into account the tax bracket in which a person will fall. For a tax deduction worth $1,000 first determine the tax bracket, for this example we will use a 12% tax bracket. Then take 12% of $1,000, that leaves you with $120. The $120 will be deducted from a person’s taxable income NOT a tax bill. As you can see the tax credit is a powerful tool.
If I receive a Tax Refund does that make me ineligible for the MCC? No, it just means you overpaid the IRS. To benefit from the MCC you must have tax liability. DO NOT confuse tax liability with a refund. IF you received a refund, it does not mean you are not eligible. A refund is exactly that, a refund, essentially you overpaid the IRS and you are receiving a refund. But it does not make you ineligible for the MCC.
How can I determine my tax liability? To determine tax liability, look at your latest tax return. Line 24 of the IRS form 24 will show your tax liability.
How long can I claim the MCC? For as long as you live in the home and you do NOT refinance your first mortgage. If you refinance, you will lose the MCC.
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The MCC Program provides a qualified borrower with a Mortgage Credit Certificate, combined with the Lender's 30-year fixed rate first mortgage.
ELIGIBILITY CRITERIA* –
HOUSEHOLD INCOME LIMITS – Household income is considered for ALL Borrower(s), spouses and anyone 18 years or older.
1-2 person households $103,889
3 or more person households $119,471
MAXIMUM SALES PRICE LIMITS – This price must include everything paid by the buyer or on the buyer's behalf.
$579,022
HOMEBUYER EDUCATION – Homebuyers must complete a Program-approved pre-purchase homebuyer education course. Please speak with a participating lender for details.
ELIGIBLE PROPERTY – New or existing, one to four units, detached or attached, condos, townhomes.
WHAT'S THE NEXT STEP?
If you think you qualify for the program based upon the criteria above, contact a participating loan officer to get pre-approved for a mortgage.
Approved Lender List
Please speak with your tax advisor or tax professional or tax preparer to determine your estimated tax liability and the value of the MCC. The following information is for informational purposes only and does not constitute professional tax advice.
What is the mortgage credit certificate, MCC for short.
Let’s start with the basics. The Mortgage Credit Certificate is not a down payment assistance program. The MCC program provides a federal tax credit each year you live in the home that will reduce the amount of federal income tax paid. And the borrower may claim the MCC each year the home remains their principal residence. The MCC is a very powerful subsidy that a homeowner may claim each year they live in the home.
What’s the benefit of the MCC Tax Credit? There are certain tax benefits to being a homeowner, such as annually homeowners may claim mortgage interest paid on primary residence as a tax deduction. The MCC allows 20% of mortgage interest paid to become a tax credit. The remaining mortgage interest paid remains a tax deduction.
A deduction is subtracted from the adjusted gross income before federal income taxes computed. A tax credit is subtracted from the total federal income tax liability and provides dollar for dollar reduction of liability limited to the homeowner’s tax liability.
What's the different between a Tax Deduction and a Tax Credit? First let’s look at the difference between a tax credit and a tax deduction. This is where most people do not understand the power of a tax credit. In General, tax credits tend to be more valuable compared to deductions. That’s because a tax credit is a dollar-for-dollar reduction of the income tax owed. For example is a tax credit and tax deductions are both valued at $1,000 and the homeowner tax liability is $3,000 here is how the $1,000 would be applied for each.
A tax credit worth $1,000 would be subtracted from the tax liability of $3,000 leaving a $2,000 tax bill. This is a dollar-for dollar reduction.
A tax deduction works differently and that is because you need to take into account the tax bracket in which a person will fall. For a tax deduction worth $1,000 first determine the tax bracket, for this example we will use a 12% tax bracket. Then take 12% of $1,000, that leaves you with $120. The $120 will be deducted from a person’s taxable income NOT a tax bill. As you can see the tax credit is a powerful tool.
If I receive a Tax Refund does that make me ineligible for the MCC? No, it just means you overpaid the IRS. To benefit from the MCC you must have tax liability. DO NOT confuse tax liability with a refund. IF you received a refund, it does not mean you are not eligible. A refund is exactly that, a refund, essentially you overpaid the IRS and you are receiving a refund. But it does not make you ineligible for the MCC.
How can I determine my tax liability? To determine tax liability, look at your latest tax return. Line 24 of the IRS form 24 will show your tax liability.
How long can I claim the MCC? For as long as you live in the home and you do NOT refinance your first mortgage. If you refinance, you will lose the MCC.
*******************************************************
The MCC Program provides a qualified borrower with a Mortgage Credit Certificate, combined with the Lender's 30-year fixed rate first mortgage.
ELIGIBILITY CRITERIA* –
- Buyers and their spouses (occupant and non-occupant) must be first-time buyers and must be able to permanently reside in the US.
- Buyers must live in the property they purchase as their principal residence.
- All applicants must be considered irrespective of age, race, color, religion, national origin, sex, marital status, military status or physical handicap.
- Buyers must occupy the property purchased within 60 days of closing.
- Buyers must live in the property as their principal residence and the property may never be rented.
HOUSEHOLD INCOME LIMITS – Household income is considered for ALL Borrower(s), spouses and anyone 18 years or older.
1-2 person households $103,889
3 or more person households $119,471
MAXIMUM SALES PRICE LIMITS – This price must include everything paid by the buyer or on the buyer's behalf.
$579,022
HOMEBUYER EDUCATION – Homebuyers must complete a Program-approved pre-purchase homebuyer education course. Please speak with a participating lender for details.
ELIGIBLE PROPERTY – New or existing, one to four units, detached or attached, condos, townhomes.
WHAT'S THE NEXT STEP?
If you think you qualify for the program based upon the criteria above, contact a participating loan officer to get pre-approved for a mortgage.
Approved Lender List