No one is as excited about buying a house as first-time homebuyers are, but they also tend to be the most confused with the process. With such a large purchase and investment, it’s essential to seek the assistance you need to ensure you’re getting the most bang for your buck. That’s where the MCC Tax Credit Program comes into play. It’s an excellent incentive for those who qualify, as it can help reduce your new home’s overall cost.
We can all agree that buying a house is very different than buying a refrigerator! Buying a home is not only an advantageous move for your finances, but it’s also great for the economy, so the government wants to assist you in making this purchase. Bottom line: you don’t have to pay the ticket price or do it alone. Many tax incentives help to get the keys to a new home in your hand with a significant discount.
MCC Tax Credit Program
At our CPA Firm, Sickler, Tarpey & Associates, we specialize in helping first-time homebuyers with the MCC Tax Credit Program. This tax incentive can reduce the cost of your future home by up to $2,000 per year. On a 30-year mortgage, that’s a total savings of up to $60,000 — a huge dent in your future home’s price! It sounds great — and it's truly an exceptional incentive — but the catch is that not all homebuyers are eligible. Let’s look at who can take advantage of the MCC tax credit.
The MCC (Mortgage Credit Certificate) Program is a product of the federal government, but it’s administered by each state individually. For example, Texas has the TDHCA MCC and California the CHFA MCC. Its purpose is to give assistance and relief to first-time homebuyers on a state-by-state level. So although the maximum benefit is $2,000 per year, the TDHCA MCC, as an example, might differ from other states. Even though states operate individually, the qualifications for eligibility are the same. If you’re not purchasing your first home, you may not qualify. However, there are a few exceptions:
Many assume that a first-time or “new” homebuyer is someone who’s never bought a house before. This definition is correct; however, the HFA (Housing Finance Agency) defines a “new” homebuyer a little differently.
You qualify as a “new” homebuyer if you haven’t owned a residence in the past three years. That means if you bought a home in the past (so you’re not a “first-time” homebuyer), but have not owned a home in the past three years, you can still qualify for the MCC tax credit!
All Homebuyers in Targeted Areas
The first-time homebuyer requirement and the “new” homebuyer definition don’t apply for those purchasing a home in a specified target area. These sections are particular to each state and defined by the Department of Housing and Urban Development (HUD).
Often, targeted areas fall into more impoverished or rural areas that could use a housing boost. That means you could buy more than one home in your life and still qualify for the MCC tax credit.
Active Military and Veteran Homebuyers
The first-time and “new” homebuyer requirements also don’t apply for active military and veterans. If you fall into these categories, you don’t have to be purchasing your first home or follow the three-year rule to benefit from the MCC tax credit.
Many People Qualify
Although the MCC Tax Credit Program focuses on first-time homebuyers, there are a few exceptions. These exceptions are in place to help other populations. So just because you aren’t buying your very first home, it’s still worth your time to check and see if you qualify. Again, look at the state-level (TDHCA MCC for Texas, CHFA MCC for California, etc.) to discover how you can benefit specifically. If you need help, contact us!