If you are buying your first home, are a veteran, or are a repeat homebuyer purchasing in a Targeted Area, a Mortgage Credit Certificate (MCC) from THDA could save you thousands of dollars by reducing the amount of federal income tax you owe each year.
What is TAKE CREDIT?
TAKE CREDIT is a Mortgage Credit Certificate (“MCC”) program administered by THDA. An MCC is not a loan. An MCC permits an eligible homebuyer a federal tax credit up to a maximum of $2,000 per year based on the mortgage interest paid by the homebuyer. The tax credit may be used to lower a homebuyer’s income tax liability each year the home remains owner-occupied by the certificate holder (the homebuyer).
Qualifying for TAKE CREDIT
TAKE CREDIT MCC is available to the homebuyer for the life of the mortgage loan as long as the homebuyer lives in the home and as long as the MCC has not been revoked.
The homebuyer may be eligible for TAKE CREDIT if all of the following conditions are met:
- The homebuyer is purchasing a primary residence in Tennessee
- The homebuyer is a first-time homebuyer, is an honorably discharged U.S. military veteran, has not owned a home in the last three years, or buys a home in a “targeted” area
- The homebuyer occupies the home as a primary residence
- The household income falls within the income limits for the county in which the primary residence is purchased
- The purchase price of the home is within the limits established for the county in which the primary residence is purchased
- The homebuyer completes the required Homebuyer Education course. Please contact your lender or email firstname.lastname@example.org for additional information for this course.
TAKE CREDIT may not be used with a THDA mortgage loan.
Could a Mortgage Credit Certificate be right for you?
Talk to a Lender: Talk to a THDA Participating Lender to see if the TAKE CREDIT Mortgage Credit Certificate program is right for you.
For a list of Participating Lenders, please click here.
Talk to a Tax Preparer: THDA recommends seeking tax advice from your tax preparer to determine if TAKE CREDIT would benefit you.
Refinancing and Reissuance
The U.S. Department of Treasury has released temporary and proposed income tax regulations governing the re-issuance of a Mortgage Credit Certificate when an MCC-related mortgage is refinanced. The refinancing provision is an exception to the general requirement that the mortgage in an MCC program cannot be used when refinancing an existing mortgage.
According to the IRS Form 8393 and Publication 530, an MCC holder must meet the following conditions to retain their existing MCC:
- MCC must be reissued to the same holder with respect to the same property.
- Reissued MCC must entirely replace the existing MCC.
- The certified indebtedness on the reissued MCC cannot exceed the outstanding balance on existing certificate.
- MCC credit rate must remain the same.
- Reissued MCCs cannot result in a larger credit amount than otherwise have been allowed under the existing certificate for any tax year.
- After refinance, the MCC holder has up to one year to notify THDA to reissue their certificate.
THDA must receive the following information to reissue an MCC:
- Copy of the original MCC and/or reissued MCC
- Copy of original note
- Copy of new note
- Copy of closing disclosure
- Copy of recent federal tax return with schedules
- A current telephone number in case THDA has questions