Don’t Lose Your MCC Tax Credit

Are you one of the many Americans that took advantage of historically low rates in 2020 and refinanced your home? Did you also obtain a Mortgage Credit Certificate a.k.a. MCC Tax Credit when you purchased that home?

If you answered yes to both of these questions, you need a MCC reissuance.

You have 12 months from the date of your refinance to notify the issuer of your MCC that you refinanced and potentially changed servicers. The issuer is the state or local housing agency listed on the certificate. If you fail to take this step, called reissuance, you could lose the your ability to take the tax credit going forward.

At Stockton Mortgage, we know the MCC is a powerful tool that helps reduce your Federal tax liability. That’s why we’re consistently recognized as one of the top lenders participating in theses programs. We took the extra steps when you purchased your home to check your eligibility and help you apply for this tax credit. We certainly don’t want you to miss out on those tax savings going forward. Remember, you can file using the tax credit for 30 years or until you no longer occupy the property as your principal residence. Contact your Stockton Mortgage loan officer for more details on how to retain your tax credit after a refinance. They will direct you to finding the proper form & the steps to have the tax credit reissued.

Given that it is almost time to file for that tax credit on your 2020 taxes. Here are a few tips to help you gather the right documents:

You will need Form-1098 from your mortgage servicer showing the amount of mortgage interest paid over the year. The MCC allows you to convert a percentage of that mortgage interest into a dollar for dollar Federal tax credit, not to exceed $2,000. The IRS form that you file to calculate the credit is Form 8396. You will also need the actual certificate number off of the Mortgage Credit Certificate form to file.

The most frequent question that I get asked is; What if I lost my MCC or never received it from the issuer after closing? You can contact the issuer to have a copy of the certificate emailed. Once you receive your new copy be sure to keep your MCC in a safe place with your important mortgage documents. If you are unsure how the MCC works or you have filing questions; please consult a tax professional or CPA.

If you hesitated to refinance out of fear that you would lose your tax credit. It’s not too late to contact your Stockton Mortgage Loan Officer about the possibility of refinancing. Maybe you are looking to lower your term or payment? Perhaps you are thinking of taking cash out to consolidate debt or make home improvements? Whichever it is, we are here to help you!

Written by Cindy Bradley, Director of Community Outreach & Engagement at Stockton Mortgage

Cindy has been an approved continuing education instructor for the Kentucky Real Estate Commission for over 15 years. She is an affiliate member of the Mortgage Bankers Association & the Kentucky Real Estate Educators Association.