Mortgage Credit Certificate Program PDF Print E-mail
Written by Steve Klemm   
Thursday, 19 March 2009 10:28
I wanted to write about a buyer program out there for first time home buyers or veterans to take advantage of.  I frequently attend seminars and classes on various topics and one this morning was for the Mortgage Credit Certificate Program.
 
What is it?  Well simply put, it's a tax credit in the amount of 20% of the mortgage interest paid.  The remaining 80% can still be deducted as the standard mortgage deduction.
 
I'll use an example to show how it can help you.  Say that your annual income is $40,000 and you are taking out a $100,000 loan at 5.00% for your home purchase.  Your total interest paid for the mortgage in the first year will be $4966.50.
So let's compare taking that entire $4,966.50 as an interest deduction or going the MCC route.

Without an MCC

With an MCC
Income

$40,000

$40,000
Mortgage Interest Deduction

$4,966.50

$3,973.20
Taxable Income

$35,033.50

$36,026.80
Taxes paid @ 15% bracket

$5,255.03

$5,404.02

MCC Tax Credit (20%)

$0.00

$993.30
Income Taxes Due

$5,255.03

$4,410.72
Tax Savings from MCC

$0.00

$844.31
 
This would save you $844.31 (either in taxes owed or as an additional refund) in the first year over just taking the entire $4,966.50 as a tax deduction!  And you can take advantage of it every year that you own the home.  Like the $8,000 tax credit, there are certain eligibility requirements.  Please contact me for more information about these requirements or the MCC in general.  It's a great program.
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