Buy A House And Keep More Income?

You probably have never heard of Mortgage Credit Certificates (MCC) before, most real estate professionals don’t even know about it. This is one of the best kept secrets in real estate, but it shouldn’t be!

Many homebuyers wouldn’t have qulaified without this MCC program. By reducing the amount of federal income tax you pay, the Mortgage Credit Certificate (MCC) gives you more available income to qualify for a mortgage loan and assist you with house payments. Now that increase in your take-home pay can be incorporated into your mortgage application!

It is a tax industry standard that the IRS allows homeowners to reduce the taxable income for the mortgage interest paid annually.. The benefit of the MCC is the homeowner is able to reduce dollar-for-dollar up to 20% of their yearly mortgage interest against the taxes owed to the IRS.. Don’t rush through the next few paragraphs. I have found that sometimes it’s best to let the numbers tell the story.

Loan Amount : $250,000

Interest Rate: 6%

Payment: $1,499

Now in the first year, you will pay a total of $14,916 in interest on your mortgage. Those numbers don’t change if you have a MCC or not. Hypothetically speaking, you have the MCC.

Total Paid Mortgage Interest = $14,916. With the 20%, that number equals $2,983. That means if you would normally owe the IRS, let’s say, $4,297 that year, you would now owe $1,314 ($4,297-2,983) instead ! The MCC tax credit will reduce the tax liability owed to the IRS dollar-for-dollar.. And the remaining 80%, ($14,916 X 80% = $11,933) would be an itemized deduction on your Schedule A as usual. The MCC credit is not a refundable credit, so if your tax liability is less than the credit, the difference will not be refunded to you.. The MCC tax credit is not a refundable credit, however there are benefits for the unused portion of the tax credit.. The remaining MCC tax credit can be carried forward up to 3 year, reducing future taxable income..

You can wait for your annual tax return if you want, but if you have a MCC, you might as well take full advantage and receive more immediate benefits, right? You can keep an additional $249 a month.? Homeowners with a MCC can file a revised W-4 withholding form with their employer to reduce the amount of federal income tax withheld from their wages, which increases their take-home pay.

Most readers, right now, are wishing they heard of this MCC thing years ago. This program is not a new program.? Wrong. Congress established the MCC program 1984 to assist low and moderate income families so they could become homeowners.. To be eligible for the Mortgage Credit Certificate, a homebuyer must meet the criterias set by the program including the federal guidelines..

Not every real estate transaction will be approved for the MCC.. This program is typically for first-time homeowners, or those who have not had ownership interest in a principal residence at any time in the last 3 years. To qualify for this MCC tax credit, it must be your primary residence.. For refinance mortgage transactions, MCCs won’t be issued.. Racapturning the MCC tax credit is contingent on the sale of the home or taxpayer’s income.. Calculating your personal credit may require professional assistance from a CPA or Tax Attorney. But for the curious, more tax information can be found at http://www.irs.gov/pub/irs-pdf/p17.pdf on page 259.

I know of no other program which such benefit for qualified applicants. An applicant’s need is not as important as the applicant’s desire, be sure to investigate what your area’s guidelines are. It’s easy to find infomration on your state’s government website or by calling your local Housing & Developement Corporation. Along with the forms you’ll need, they will also have a list of participating lenders. Ask your mortgage broker if they work with the listed lenders in your area. Better still, go to http://loangoose.com and request more information today!