Mortgage Tax Credit in Colorado
Did you know that there is a tax credit available to home buyers? And I’m not talking about a tax deduction its a tax credit. It’s call the Mortgage Credit Certificate or aka as an MCC. Here is a little more info:
What is an MCC? It is a certificate awarded by the City allowing the holder to take federal income tax credits. When awarded with an MCC you can take an annual credit against your federal income taxes of 20% or *30% of the annual interest paid on your mortgage. *30% is available only in City and County of Denver
What is the difference between a “Tax Credit” and a “Tax Deduction”? Basically a tax credit entitles a taxpayer to deduct the amount of the credit from their total federal income taxes owed, allowing you to receive a dollar for dollar savings on your tax liabilities. A tax deduction is subtracted from your adjusted gross income before federal income taxes are computed. When you purchase a home you are eligible to deduct your annual mortgage interest payment on your taxes.
So what happens to the tax deduction for mortgage interest when you have an MCC? When using the MCC tax credit, you are still eligible to deduct the remaining 80% or 70% not claimed as a credit. For example, if you paid $8,200 in mortgage interest for the first year, with a 30% MCC, you could take a credit of $2000 and a mortgage interest deduction of $6,200. Which ends up being a higher benefit for you and more money in your pocket, its a win win!
An MCC is available to first time home buyers (have not had home ownership in the past 3 years), qualified veterans or if you are a non-first time home buyer purchasing in a targeted area.
You must apply for the MCC at time of purchase! You can not apply after you have closed on your home! You must also apply with an MCC approved lender.
Unfortunately there are many Realtors and Lenders who are unaware of the MCC and may not disclose this information to you so this is why we are trying to get the information out. We don’t want you missing your opportunity!
The MCC is available state wide and there are income and purchase price eligibility requirements (which have recently been raised for the City & County of Denver), please contact us to find out more and see if you qualify.