Mortgage Credit Certificate Tax Credit by CalHFA


Hello I'm Molly Ellis and today we're going to talk about CalHFA's Mortgage Credit Certificate or MCC program You can use it with any of CalHFA's first mortgage programs and it can even work with non-CalHFA mortgages

The MCC is a powerful tool to help people with smaller mortgages or who do not itemize their deductions take advantage of additional financial benefits of owning a home What's great about the MCC is that it's a direct tax credit at tax time instead of just a tax deduction With an MCC you can get a credit worth up to 20% of the mortgage interest you paid in the prior tax year then if you itemize your deductions you can deduct the remaining 80% of the mortgage interest to really maximize your savings Here's how it works let's say your family earns $80,000 per year and let's say in your first year you pay $15,000 in mortgage interest Without an MCC you just deduct that $15,000 and taxable income would be $65,000

Assuming a 15% tax bracket that would be $9,750 in taxes Now let's see what happens if we add the MCC You're still making $80,000 You're still paying $15,000 in interest but now instead of deducting the full $15,000 you're deducting 80% of it so your taxable income is now $68,000 and the income tax is $10,200 Let's factor in the MCC which is $3,000 This lowers your total tax to $7,200 for a savings of more than $2,500 if you don't itemize deductions as nearly half of homeowners with mortgages do not then it's a straight $3,000 savings on your taxes remember the MCC can be used on any mortgage if you're a first-time homebuyer as long as you meet the sales price and income limits Call us today and we'll hook you up with one of our preferred loan officers they can help you with every step of the home buying process Thanks for watching and good luck on your road to homeownership

Source: Youtube


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