Low to moderate income homebuyers in Arkansas may qualify for the Arkansas Mortgage Credit Certificate Program. The program is issued by the Arkansas Development Finance Authority (ADFA) and allows certain qualified homebuyers to claim a yearly tax credit of up to 50% of their mortgage interest, not exceeding $2000.
In order to understand the specific Mortgage Credit Certificate requirements for the state of Arkansas, we’ve organized the program requirements below based on information from the Arkansas Development Finance Authority.
Qualifying for the MCC Tax Credit in Arkansas
The program requirements you need to meet in order to be eligible for a Mortgage Credit Certificate Tax Credit in Arkansas are as follows:
How Does the MCC Mortgage Credit Certificate Arkansas Work?
While each state runs its own version of the program, there are similarities between many states, and Arkansas is no different. In Arkansas, participants in the MCC tax credit program can reduce the amount of federal income taxes owed each year by a predetermined percentage (50%) of their paid mortgage interest, up to $2000. This credit can be claimed for the life of the loan, as long as it remains the homeowners primary residence. ADFA suggests working with a qualified tax professional to determine the benefit of using the program. A “recapture tax” may be assessed if the property is sold within 9 years.
How Much Can A Qualified Homebuyer Save?
In Arkansas, the mortgage credit certificate rate is 50%, or up to $2000 annually. For example, if you purchase a home for $100,000 with a 4% interest rate, you’d pay $4000 in interest your first year. 4000 x 50% MCC = $2000 Tax Credit. Any mortgage interest paid over $2000 cannot be received as a tax credit under this program, but may be eligible for credit under others.
Other Programs Available to Homebuyers in Arkansas
In addition to the Arkansas Mortgage Credit Certificate program, Arkansas also offers two mortgage loan products that can be used with the MCC program, the AFDA Move-Up and AFDA Move-Up Choice. These programs help homeowners obtain affordable mortgages, and can sometimes be combined with other buying incentives. The AFDA offers a variety of helpful resources for individuals on their journey to homeownership, such as loan calculators, approved lenders, and down payment assistance programs.
If you’re ready to get started on using the MCC Tax Credit in Arkansas, contact us to help you! While some of the program guidelines can sound specific and complicated, we know how to make it work to your benefit. Our firm is happy to help you with any of your first time homebuyer tax needs.