Many first-time homebuyers in North Carolina may be eligible to save up to $2,000 a year with the Mortgage Credit Certificate (MCC) offered by the Martini Mortgage Group in partnership with North Carolina Housing and Finance Agency (NCHFA).  This tax credit is not just for the first year, it is up to $2,000 every year as long as the home remains your primary residence.  

A MCC allows eligible first-time homebuyers to receive a federal tax credit of 30% of the mortgage interest paid annually on existing homes (50% on new construction). If you are one of the many that will qualify, you could save up to $2,000 per year on your federal tax liability.

Martini Mortgage Podcast Special Episode 172: Tax Credit 

Difference between Tax Credits and Tax Deductions

Understanding the difference between tax credits and tax deductions can help reduce your tax burden. A tax credit directly reduces the amount you owe to the government, while a tax deduction reduces your taxable income. With the MCC you are able to get both, assuming you itemize your tax return.

Imagine that after all eligible deductions are taken out of an individual’s income, they come to be taxed on $50,000. For example, a tax credit of $2,000 in this case would help reduce the tax liability from $5,000 (at a rate of 10%) to $3,000 – for a tax savings of $2,000 overall.

A tax credit directly reduces the amount of tax you owe dollar-for-dollar.  So a $2,000 tax credit lowers your tax by $2,000. 

Kevin Martini | Certified Mortgage Advisor and Raleigh Mortgage Broker

On the other hand, if this person were able to have their taxable income reduced from $50,000 to $47,500 through a tax deduction of $2,500 – their tax bill would be significantly lower at just $4,750 (from previously calculated: 10% x 50000 = 5000). Clearly understanding the difference between tax credits and tax deductions could result in significant savings for individuals or companies who are filing returns with the government.

To learn more about tax benefits of owning a home and having a mortgage, check out this informative article called: Tax Benefits to Owning a Home and Having a Mortgage

Are you eligible?

You may be eligible if:

• you are a first-time homebuyer or military veteran or buying in a targeted census tract
• you meet the income limits and sales price limits
• you are purchasing a home in North Carolina
• you will occupy the home as your primary residence within 60-days of closing
• you are a legal resident of the U.S.

To determine your eligibility and property eligibility, contact either Kevin Martini or Logan Martini with the Martini Mortgage Group.