{"id":2424,"date":"2022-08-24T10:00:00","date_gmt":"2022-08-24T14:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2424"},"modified":"2024-04-25T23:18:42","modified_gmt":"2024-04-26T03:18:42","slug":"what-are-qualified-mortgage-credit-certificates-for-home-buyers","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/what-are-qualified-mortgage-credit-certificates-for-home-buyers\/","title":{"rendered":"What Are Qualified Mortgage Credit Certificates for Home Buyers?"},"content":{"rendered":"\n
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It\u2019s One of the Lesser-Known Tax Breaks\u2026<\/figcaption><\/figure>\n\n\n\n

If you\u2019re like most homeowners, you itemize deductions on your tax return each year and claim your deductible mortgage interest. Did you know there\u2019s an alternative? It\u2019s called the mortgage credit certificate (MCC). The IRS calls it the \u201cFederal Mortgage Subsidy.\u201d<\/p>\n\n\n\n

Sounds like a good thing for those who happen to know what it is, right? And you need to know about it as a first-time home buyer \u2014 before<\/em> you buy your home.<\/p>\n\n\n\n\n\n\n\n

Why You Should Know About the MCC<\/h2>\n\n\n\n

With the MCC, you can get back up to 20% of your interest as a tax credit. That\u2019s 20% of the mortgage interest you paid. Not just once. You can keep claiming benefits year after year.    <\/p>\n\n\n\n

In Rhode Island, for example, qualified first-time homebuyers are eligible for a certificate that gives a \u201cdollar-for-dollar tax credit of up to $2,000<\/a>\u201d which may be claimed yearly throughout the life of the mortgage.<\/p>\n\n\n\n

Is the MCC only for first-time home buyers? Not exactly. It can be for anyone who hasn\u2019t owned a home in the last three years, or people buying in \u201ctargeted areas\u201d as defined by their state or by the Department of Housing and Urban Affairs (HUD). Buyers who are in active military service as well as veterans can also get this credit.<\/p>\n\n\n\n

But no matter where or on what basis you get it, you\u2019ll probably need to be proactive. Don\u2019t expect your mortgage broker or the loan officer from the bank to tell you about it if you don\u2019t ask. They can help you apply for the qualified mortgage credit certificate with your state or a local housing finance agency. Or you can do a little searching and talk to that agency yourself.<\/p>\n\n\n\n

How the MCC Is Better Than the Itemized Deduction<\/h2>\n\n\n\n

Most every homeowner knows about the itemized deduction opportunity. Any itemized deduction you claim on your mortgage interest is capped at your marginal rate<\/em>. That is the highest percentage you pay for your taxes. <\/p>\n\n\n\n

In contrast, a tax credit is fully credited<\/em>, reducing your taxes that much more. <\/p>\n\n\n\n

Wait, there\u2019s more! The remaining 80% mortgage interest you paid over the year can be claimed as an itemized tax deduction, further lowering your federal tax payment.<\/p>\n\n\n\n

Now, there is an income limit to claim these credits, but it\u2019s high enough to give many buyers a break.<\/p>\n\n\n\n

There\u2019s also a limit on the home price to get the credit, and there is a fee to claim it.<\/p>\n\n\n\n

Helpful Facts About the Mortgage Tax Credit<\/h2>\n\n\n\n

The point of the mortgage credit certificate is to assist home buyers with modest incomes as they pay the lender interest on the mortgages they take out on their homes.<\/p>\n\n\n\n