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General Overview The Mortgage Credit Certificate (MCC) Program is being offered to eligible first time homebuyers who are interested in buying a home anywhere in Tulare County. The MCC Program is being sponsored by the Housing Authority of the County of Tulare and the incorporated cities in the county - Dinuba, Exeter, Farmersville, Lindsay, Porterville, Tulare, Visalia and Woodlake. The Housing Authority of the County of Tulare administers the program under contract with Fred Consulting Associates. What is an MCC? A Mortgage Credit Certificate (MCC) provides an annual tax credit for homebuyers (MCC holder), thus reducing the amount of Federal income tax they pay. This reduction in income taxes provides more available income to homebuyers to qualify for a mortgage loan and to make their monthly mortgage payments. The tax credit can be taken by MCC holders as long as they maintain their original mortgage and live in the home as their principal residence. Under the MCC program, the maximum tax credit available is 20 percent of the annual interest paid on the MCC holder’s mortgage. How does the MCC reduce your taxes? In the example given in Table 1 below, a borrower with a 6.25% fixed rate 30-year mortgage of $120,000 would make $7,500 in interest payments during the first year of the mortgage. (The MCC Program allows only fixed rate mortgages. Interest payments on a fixed-rate mortgage will go down gradually each year.) The borrower deducts 80% of that interest ($6,000 in our example)—along with other allowable deductions—from his/her total gross income in order to figure the “adjusted gross income” on which he will calculate his/her total tax liability. After the borrower has calculated his/her total tax liability, the remaining 20% of the interest ($1,500 in our example) is deducted from his/her total tax liability. If this subtraction results in a negative number—in other words, if the borrower is unable to use the entire MCC tax credit in this particular tax year—the credit may be carried forward and used up to three calendar years in the future. By taking this action, the borrower will have more disposable income to make mortgage payments. Table 1: Effect of a Mortgage Credit Certificate—Example
Note that the MCC program applies only to the borrower’s federal tax liability. State taxes are not affected. What is the difference between a "Tax Credit" and a "Tax Deduction"? A "tax deduction" is subtracted from your adjusted gross income before you calculate your federal income taxes. A "tax credit", on the other hand, entitles you, the taxpayer, to subtract the amount of credit from your total federal income tax bill. We are not tax advisors. If you have any questions about how your taxes will be affected, you should consult your tax accountant or call the IRS at 1-800-TAX-1040. What are the purchase price and income limitations for MCC participation? As stated earlier, Mortgage Credit Certificates are available to first-time homebuyers anywhere in Tulare County. Table 2 shows the purchase price and income limitations for MCC Program participants. Table 2: MCC Program Purchase Price and Income Limitations
Target Area Census Tracts: 2.01, 2.02, 3.02, 4.01, 5.01, 5.02, 6, 7.01, 7.02, 10.04, 11, 12, 16.01, 16.02, 22.02, 26.01, 26.02, 28, 29.01, 30.01, 30.02, 32, 39.01, 40, 41.01, 42, 43, 44, 45 How does a borrower obtain an MCC? As a borrower, you should contact a participating lender, i.e., a mortgage broker or mortgage banker. A list of participating lenders is included on this page or available from the MCC Administrator at (415) 898-1750. If you are working with a Realtor, (s)he should have a list of participating lenders. All MCC applications are completed by your lender using the information provided by the homebuyer. The lender then submits the MCC application to the MCC Program office that will process the application and issue the MCC to the borrower through the lender. Potential for recapture of a portion of the tax credit if the home is sold within the first nine years after purchase. In order to discourage individuals from buying a home primarily to benefit from the tax credit and short term appreciation potential, the federal government has initiated a potential recapture of a portion of the tax credit if a home is sold within the first nine (9) years after purchase. Certain conditions must exist for the recapture to take effect. The MCC staff and your lender can outline the specifics of this recapture program at the time of your application. What other eligibility criteria apply under the MCC Program? The following criteria also apply to eligibility under the MCC Program in addition to sales price and income limits noted earlier.
For Questions or Further Information Contact: Tulare County MCC Program
Participating Lenders in the Tulare County Mortgage Credit Certificate Program
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