The Virginia Housing Development Authority has rolled out a new Mortgage Credit Certificate program that gives Virginia’s qualified homebuyers another option to help make purchasing a home more affordable.
Effective May 21, 2015, the MCC allows eligible homebuyers to receive a dollar-for-dollar reduction in their federal income taxes of up to 20 percent of the annual interest paid on their mortgage. By reducing the amount of federal income tax a qualified homebuyer owes, an MCC boosts the tax benefits of owning a home.
TO BE ELIGIBLE, BORROWERS MUST:
- Be first-time buyers (waived in federally-targeted areas), or not have owned a
home as a primary residence in the past three years.
- Have income at or below VHDA’s maximum household income limit for the area.
- Purchase a home below VHDA’s maximum sales price.
- Use the home as their principal residence.
ADDITIONAL INFORMATION:
- Credit is equal to 20 percent of the annual mortgage interest paid. Remaining
80 percent remains an eligible itemized deduction.
- MCC is effective for the life of the mortgage, as long as the borrower continues
to live in the home.
- Borrower must have a federal tax liability. This is not a “refundable” tax credit. However, unused credit may be carried forward for up to three years.
- Does not apply to state income tax.
- MCC borrowers who sell their home in the first nine years of homeownership
may be subject to federal recapture tax.
For the latest information, program updates and a list of participating lenders, check out vhda.com/mcc.
LEARN MORE:
To speak with a VHDA MCC expert, please contact Loan Programs Manager Janice Burgess at 804.343.5926 or Business Development Officer Shelia Doplemore at 804.343.5988. You may also email MCCInfo@vhda.com.
VHDA determines whether homebuyers qualify for MCCs under the Internal Revenue Code, but home buyers 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 tax advice to anyone.
Ann Brown is a senior copywriter for VHDA.