A Mortgage Credit is a Tax Credit and Not a Deduction!

A Mortgage Credit allows an eligible homebuyer to claim an annual federal income tax credit. This annual credit results in a dollar for dollar reduction which is applied towards the homebuyer’s federal income tax obligation. The credit is either 15% or 20% (depending on property location) and is applied to a portion of the total mortgage interest paid every year for the duration of the first mortgage loan.

The Mortgage Credit Certificate is obtained thru the City of Los Angeles. By applying and meeting the requirements of the program the city issues a Mortgage Credit Certificate (MCC).

This mortgage credit is a tax credit and not a deduction. The credit is applied directly to the adjusted amount of your federal Income taxes therefore lowering your taxes due.

Your mortgage credit can be received monthly by adjusting your W-4 to reflect the mortgage credit allowing you more monthly income or you can wait until the end of the year and realize the tax credit saving in one lump sum when filling your federal income tax return.

Tax Credit: Subtracted from the total federal income taxes due, on a dollar-for-dollar basis. Deduction: Subtracted from the adjusted gross income before federal income taxes are computed