If you were issued a qualified Mortgage Credit Certificate
(MCC) by a state or local government under a qualified mortgage credit
certificate program, you may be entitled to take a credit for qualified
mortgage interest paid. Certificates issued by the FHA and other federal
agencies do not qualify for the credit. The certificate must be issued for your
main home, and it must be located in the area of the governmental unit that
issued the certificate.
Download Form 8396 Mortgage Interest Credit from the Internal
Revenue Service (IRS) website.
Complete the information on the form as it is shown on your
income tax return. Put the name of the issuer of the MCC, certificate number
and the issue date in the applicable sections.
Enter the interest on the certified mortgage amount in Line
1 and the certified credit rate on Line 2. The credit rate cannot be less than
10 percent or more than 50 percent and it will not be the same as the interest
rate on your home mortgage.
Refer to the Form 8396 instructions for the amount to enter
on Line 3 if Line 2 rate is more than 20 percent or you refinanced your
mortgage. Otherwise, multiply Line 1 by Line 2 and enter the amount on Line 3.
Reduce your home mortgage interest deduction on Schedule A
or F of tax return Form 1040 by the amount on Line 3.
Add any credit carry-forwards from prior years and compute
the current year mortgage interest credit which will be entered on Line 54 of
your Form 1040 tax return. If part of the credit is not currently usable, show
those amounts of excess mortgage interest credit as carry-forwards to the
subsequent year.
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