MCC Tax Credit

The MCC tax credit program allows first time home buyers to take part of their annual mortgage interest as a tax credit instead of a tax deduction.

MCC Tax Credit Saves $$ on Federal Taxes!

Each year when you file your tax return, you are allowed to subtract the total amount of interest you paid on your mortgage from your income, reducing your taxable income.

For example, if your total income is $60,000 and you paid $12,000 in mortgage interest for the year, then your taxes are calculated based on $48,000, not $60,000.

With the mortgage credit certificate tax credit, you subtract 80% of your mortgage interest payments from your gross income, calculate your tax liability, then use the other 20% of your mortgage interest paid as a tax credit.

The following example will illustrate how the tax credit works (please remember that these are just numbers being used as an illustration – please consult your tax advisor for advice on your personal finances):

Here are the calculations:

DescriptionNo Mortgage Tax CreditWith Mortgage Tax Credit
Annual Income$60,000$60,000
Annual Mortgage Interest ($12,000)<$12,000><$9,600>
Adjusted Gross Income$48,000$50,400
Tax Liability @ 15%$7,200$7,560
Mortgage tax credit (20% of mortgage interest)$0<$2,400>
Total Federal Taxes to be paid$7,200$5,160

This program can be used for the purchase of your primary residence only, and there are both income and sales price limitations.  Please refer to the MCC Tax Credit by County page for more information.

If you’d like to learn more about this valuable tax benefit, give me a call at (805) 351-3991 or send an email message to