MSHDA Michigan State Housing and Development Authority

MCC Mortgage Credit Certificate Program

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

Mortgage Credit Certificate (MCC) reduce the amount of federal income tax a home buyer pays. The annual cost savings is calculated on a monthly basis to help Traverse City home buyers qualify for a higher mortgage payment, and therefore a higher priced home and therefore expanding home choices. MCC's are available to home buyers who meet household income and Traverse City Home purchase price limits.

CALCULATE THE CREDIT

Total Mortgage Amount X Loan Interest rate = Annual interest

Annual Interest X MCC Mortgage Credit Certificate 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% = $5,500

$5,500 X 20% = $1,100 annual tax credit.

The specific amount of the mortgage interest credit depends on home much interest you pay on the mortgage loan, however, the amount of the credit can not be more that 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 years, or until used, whichever comes first. Refer to IRS Form 8396 to calculate and claim your credit.

WHERE CAN I GET A MORTGAGE CREDIT CERTIFICATE FOR THE PURCHASE OF MY TRAVERSE CITY HOME?

Many banks, Traverse City credit unions and mortgage companies (Such as Traverse Mortgage/Georgie Cook 231-995-8704) participate in the MCC Mortgage Credit Certificate. For a list of participating Michigan mortgage providers Click Here . Contact a participating lender to apply for the credit certificate. This can be done at the same time a Traverse City mortgage loan application is made.

WHAT TYPE OF MORTGAGES CAN A MICHIGAN CREDIT CERTIFICATE BE COMBINED WITH?

Mortgage Credit Certificates can be combined with conventional, FHA, Rural Development and VA mortgage loans. Mortgage Credit Certificates are not available with MSHDA (Michigan State Housing & Development Authority mortgages or with Traverse City refinance loans.

WHAT REQUIREMENTS ARE THERE?

Federal IRS and Michigan State regulations apply to anyone who obtains a MCC Michigan Credit Certificate.

These include:

You cannot have owned a home as a principal residence in the last three years unless the home is being purchased in a targeted area.

For example; Traverse City is a Target Area and the rest of Grand Traverse County is not.

The home Must be a single family residence and used as your primary residence including single family homes, condominiums and some manufactured homes.

The Mortgage Credit Certificate tax Credit is considered to be a subsidy so Traverse City home buyers 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 (Michigan State Housing Development Authority) recognizes that this may be a concern so the Recapture Tax reimbursement program was created to reimburse borrowers for any recapture tax paid to the IRS.