Mortgage Interest Tax Credit
The government's policy is to encourage home ownership.  To help
low-income people become homeowners, the government offers
certain assistance, including the opportunity to claim a credit for mortgage
interest.



Mortgage Credit Certificate
You may be eligible for a tax credit up to $2,000 of home mortgage interest
paid through mortgage interest certificates.

A mortgage credit certificate (MCC) is a certificate issued by certain state and
local governments that allow a taxpayer to claim a tax credit for some portion
of the mortgage interest paid during a given tax year.

The amount of the mortgage credit varies depending on the state or local
government that issues the certificates, but is capped at a maximum of
$2,000 per year by the IRS.


Home Mortgage Interest Tax Credit Conditions

Calculating the Home Mortgage Interest Tax Credit
You must reduce your deduction for home mortgage interest by the amount
of any credit you claim.

The credit cannot be more than $2,000 if the percentage shown on your
mortgage credit certificate is 20% or more. 

Example: A homeowner receives an MCC that offers a 30% credit on a
$200,000 loan for 30 years with a rate of 6%, the allowable credit would be
determined as follows:

 The total credit in the above example exceeds the IRS limit of $2,000.  The
homeowner would report a $2,000 credit on their tax return.  Note that if the
homeowner itemizes their deductions they must reduce the amount of home
mortgage interest they would deduct by the $2,000 above. 

The homeowner may continue to receive a tax credit as long as they live in the
home and retain the mortgage. 




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