Purchasing a house can be expensive, but there are measures in place to make it easier, particularly for people buying a home for the first time. One option is a mortgage credit certificate. What is the certificate, and how does it work?
A Mortgage Certificate Is A Tax Credit
A mortgage credit certificate, usually shortened to MCC, is a credit issued to first-time homebuyers by the local or state government. This certificate allows first-time homeowners to claim a federal tax credit for mortgage interest paid on the loan, with a limit of up to $2,000. When someone takes out a mortgage, the majority of the payments go toward interest. This credit certificate allows homeowners to recover some of the interest paid in the form of a tax credit.
Who Qualifies For This Credit?
Not every homeowner will qualify for this certificate. Usually, this is a certificate reserved for low-income people purchasing a home for the first time. Or, these credits are limited to people who purchase a house in a certain area. Usually, these programs are run by the states. Every state has a slightly different income limit for people purchasing a home. Everyone needs to check the local rules and regulations set by their states.
Is The Certificate Different From A Tax Deduction?
Yes, the mortgage credit certificate is different from a tax deduction. A tax credit is directly applied to the amount of money someone owes in taxes. In contrast, a tax deduction is a deduction from someone’s gross taxable income. A tax credit is better for tax purposes than a tax deduction. It is possible for someone to be awarded a mortgage credit certificate and deduct the interest paid on the mortgage from their taxes. Anyone who has questions about how deductions and credits work should work with a tax professional.
Do Not Leave Money On The Table
It is true that purchasing a house for the first time can be a challenge; however, there are financial measures in place to make this process easier. Anyone who is buying a home for the first time should take a look at the state qualifications for the mortgage credit certificate program. This could help people save money on their taxes.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.