Just another opprotunity for home buyers - however only available in Michigan, here are the details:

MCC - Mortgage Credit Certificate Program

     

MCC - Mortgage Credit Certificate Program

 

 

PROGRAM OVERVIEW:

 

This program is made available only through approved Lenders and is available for a limited time. 
It is available to eligible borrowers on a first-come,
 first-served basis throughout the State of Michigan.  
Eligible borrowers must meet MSHDA income and sales price limits and in some cases, prior homeownership restrictions.

 

Homebuyers taking advantage of the MCC Program may qualify for 20% of their annual mortgage
 interest paid to be credited against their year-end tax liability. 
This is not a one time tax credit, but can be taken advantage of each year until the original mortgage is paid in full as long as the property remains the homebuyer’s primary residence.  The homebuyer must apply for the MCC through a participating lender.

 

HOW DOES THE MCC PROGRAM WORK?

 

1.  HOW WILL A MORTGAGE CREDIT CERTIFICATE HELP ME PURCHASE A HOME?

MCC reduce the amount of federal income tax a homebuyer pays. 
The estimated annual cost savings is calculated on a monthly basis to help homebuyers
qualify for a higher mortgage payment, and therefore a higher priced home-expanding home choices.  MCCs are available to homebuyers who meet household income and home purchase price limits.

 

2.  CALCULATING THE CREDIT

Total Mortgage Amount x Loan Interest Rate = Annual Inters

Annual Interest x MCC Rate (20%) = Tax Credit for the Year

Assuming a mortgage of $100,000 at 5.5% interest, the annual tax credit would be:

 

$100,000 x 5.5% = $5,000

 

$5,000 x 20% = $1,100 annual tax credit

 

The specific amount of the mortgage interest credit depends on how much interest you pay on the mortgage loan,
 however, the amount of the credit cannot be more than your annual federal income tax liability
after all other credits and deductions have been taken into account. 
The unused portion of the mortgage interest credit can be carried forward to the next three years,
or until used, whichever comes first.  Please refer to IRS Form 8396 to calculate and claim your credit.

 

3.  WHAT TYPES OF MORTGAGES CAN A MCC BE COMBINED WITH?

MCCs can be combined with conventional, FHA, Rural Development and VA mortgage loans.  MCCs are not available with MSHDA mortgages or with refinanced loans.

 

4.  WHAT REQUIREMENTS ARE THERE?

Federal, IRS and state regulations apply to everyone who obtains a MCC.

These include:

·        The homebuyer cannot have an ownership interest in a principal residence in the last three years, unless the home is being purchased in a targeted area.

·        The home must be a single family residence and used as a principal residence.  A principle residence can include single family homes, condominiums and certain manufactured homes.

·        Because a tax credit is considered to be subsidy, homebuyers may be subject to a federal ‘recapture tax’.  This tax may apply, if the home is sold within nine years with a gain on the sale.  MSHDA recognizes that this may be a concern for individuals, so the Recapture Tax Reimbursement Program was created to reimburse borrowers for any recapture tax paid to the IRS.