Colorado Housing and Finance Authority’s (CHFA) Mortgage Credit Certificate (MCC) Program is back! (wow that was a mouthful).

Unlike the one time $8,000 tax credit provided by the Federal Government to stimulate home buying in 2009 and 2010, this tax credit keeps on giving.

The MCC program is available to:

• first time home buyers
• non-first time home buyers in targeted areas
• eligible veterans (either first time buyers or not)

How it Works

MCC  allows the homeowner to claim 20% of the mortgage interest paid during a tax year as a dollar-for-dollar deduction from their federal taxes.  The remaining 80% of the mortgage interest may still be calculated as an itemized deduction.

The tax credit may be used annually as long as the homeowner owns and occupies the home as their primary residence or until they refinance.

CHFA has provided an example comparing two federal tax returns – one without MCC and one with.  Here is a quick snapshot of the customer:

• $50,000/year income
• 30 year fixed mortgage
• 6% mortgage interest rate
• $140,000 mortgage
• $1,100/year in property taxes

Refund without MCC:  $286

Refund with MCC: $1532

What Else You Should Know

• You do not have to obtain a CHFA first mortgage to be eligible for the CHFA MCC
• The cost of the program is a one time fee of $700 at closing
• You must work with a CHFA MCC approved lender (yes we are one of them)
• MCC users are subject to a recapture tax
  • If you have a CHFA 1st mortgage CHFA will reimburse any recpature tax that is required to be paid

If you a potential first time homebuyer in Colorado and would like to investigate the MCC program we would like to help you navigate the path to get this tax credit.  Just contact us and let us know you are interested and we will help you out.

What do you think?

Leave a comment and tell us what you think about the MCC program.

• Do you think it is a good program?
• Is it too confusing?
• Does it cost too much at closing?

On February 17, 2009, in Denver, President Obama signed the American Recovery and Reinvestment Act (ARRA).  This bill had substantial changes to the federal First-Time Home Buyer Tax Credit, including eliminating the 15-year repayment obligation of the Borrower which was part of the 2008 Housing and Economic Recovery Act (HERA).

However, and most pertinent, Section 1006 (e) of ARRA also eliminated the prohibition of the Borrower’s access to the federal First-Time Home Buyer Tax Credit if their loan was financed with Mortgage Revenue Bonds (MRBs).

The CHFA FirstStep and CHFA FirstStep Plus programs, made available on February 1, 2010, are funded with MRBs. Many ARRA or federal First-Time Home Buyer Tax Credit-related websites have not been updated to highlight this specific provision of the law; however, the actual IRS Form 5405 has been updated to reflect this change. Click here to read complete ARRA bill as written.

The Wynn Team has found that the National Association of Home Builders website created for the First Time Home Buyer Tax Credit has the most comprehensive information and the best FAQ page of any other site.  By the way, they have updated the MRB inclusion.

This is important because qualified first time home buyers who need down payment assistance and want to take advantage of the First Time Home Buyer Tax Credit before it goes away can finance a home with competitive market rates.

Lending A Hand

Marla Wynn

The Wynn Team