How often can I take the credit?
After escrow closes and you receive your MCC, you can take the income tax credit every year, as long as you keep the same home and the original first mortgage, and continue to live in the house as your principal residence.
Does an MCC cost any more?
There is a non-refundable application fee (up to $250) for an MCC.
Income included in qualifying for an MCC:
Annualized gross income by taking current gross monthly income (at the time of application) and multiplying by 12 (before deductions), including: wages, salaries, commissions, tips, part-time pay, overtime pay, net rental income, fees, bonuses, dividends and interest (including tax exempt), alimony, child support, public assistance, sick pay, social security, VA compensation, income from trusts, income from business activities and investments, and all other income.
Can your parents, who own their own home, co-sign?
If a co-signer or co-mortgagor is not going to live in the residence, he or she is not required to meet the first-time home ownership requirement. Non-occupant co-mortgagors will not be on the MCC application and will not be eligible for the tax credit. However, the income of the co-mortgagor must be included in qualifying and is subject to the maximum income limitation.
Property types with which you can use an MCC:
Single Family Residence (SFR), Condominium, Townhouse, Mobile Home (on a permanent foundation) and duplexes only. No three or four unit properties.
Can I buy from a relative who will finance the property himself?
No, for two reasons. MCC requires that you obtain a new mortgage when you purchase the home (No Seller carry-back financing) and that there be no interest to related persons.
What is Recapture?
"Recapture", or the recapture tax, is a supplemental federal income tax to which MCC recipients may be subject if they sell the house they purchased with MCC assistance within nine years of the date of purchase. A detailed disclosure form and description of recapture is included in MCC Form 12b.
When does recapture apply?
Recapture tax may be assessed if all three of the following happen at the same time: (1) The buyers sell the house they purchased with MCC assistance within nine years of the date of purchase, (2) The home is sold at a gain, and (3) The household income has increased beyond allowable MCC thresholds.
When and how will the program offer a 15 percent credit?
As soon as current funds are exhausted, the 20% and 10% credits will be replaced by a 15% credit. We are currently projecting that the 15% credit will have the same purchase price and income limitations as the current 20% credit. Additional information will be provided as the program changes.
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