The following information is provided by the Virginia Housing Development Authority (www.vhda.com):
If you’re buying your first home, a Mortgage Credit Certificate (MCC) from VHDA could save you thousands of dollars by reducing the amount of federal income tax you owe.
Unlike an income tax deduction, an MCC is a dollar-for-dollar credit against your federal income tax liability:
- The credit is equal to 20 percent of the annual mortgage interest you pay.
- The remaining 80 percent may still be taken as a tax deduction.
- The MCC is effective for the life of your mortgage, as long as you live in the home.
To be eligible for an MCC, homebuyers must:
- Be a first-time homebuyer, or not owned a home as a primary residence within the past three years. (This requirement may be waived if purchasing a home in a federal targeted area.)
- Have income at or below the maximum household income limits.
- Purchase a home below the maximum sales price.
- Use the home as their principal residence.
If you obtain and use a MCC and then sell your home in the first nine years of homeownership, you may be subject to the federal recapture tax.
VHDA determines whether homebuyers qualify for MCCs under the Internal Revenue Code, but homebuyers must determine for themselves whether an MCC will save them money and how valuable an MCC will be for them over the life of their loan. VHDA cannot and does not give any tax advice to anyone.
You can apply for a Mortgage Credit Certificate through any approved participating lender. The list of participating Mortgage Credit Certificate lenders will be updated as new lenders are approved.
Questions About the MCC Program? Contact a Tidewater Home Funding mortgage consultant today. 757-366-8690