The NC Home Advantage Tax Credit enables eligible first-time buyers — those who haven’t owned a home as their principal residence in the past three years — and military veterans to save up to $2,000 a year on their federal taxes with a Mortgage Credit Certificate (MCC). This benefit offers a true bottom line income tax credit up to $2000 each year. The tax credit enhances the affordability of a primary residence purchase in NC. Lowering income taxes makes home buying more affordable!
This leaves you with more money to put toward your mortgage payment. If you qualify, you can claim a federal tax credit for 30% of the interest you pay on an existing home (50% on a newly built home) – up to $2,000 per year for every year you live in your home.
How does an MCC work?
In order to receive the NC Home Advantage Tax Credit, you must apply and be approved for an MCC from the NC Housing Finance Agency prior to purchasing your home. You apply for the MCC at the same time as your mortgage. Once you’re in your new home, you’ll receive your MCC and be set for tax time.
Am I eligible?
You may be eligible for the NC Home Advantage Tax Credit if:
- You are a first-time home buyer or military veteran
- or, you are buying in a targeted census tract
- You meet the income and sales price limits ($58,000.00 annual income cap for 1-2 person family in Forsyth County as of 2018)
- You are purchasing a home in North Carolina
- You apply and are approved for the MCC prior to your home purchase
- You occupy the home as your principal residence within 60 days of closing
- Your loan is reviewed and approved by the NC Housing Finance Agency prior to closing
- You are a permanent legal resident of the United States
What properties are eligible?
- Single-family homes
- New or used manufactured homes
If you are eligible for a Mortgage Credit Certificate, download our home buyer certificate and take it to a participating lender >> DOWNLOAD.
Here’s an example of how this tax credit works. On a $148,000 mortgage with an interest rate of 4.5%, you might pay $6,660 in interest the first year. The MCC would allow you to take a federal income tax credit of $1,998 ($6,660 x 30%) for that year. Please note that you can still claim a mortgage interest deduction for the remaining 70% of the mortgage interest you paid.
You don’t have to wait until tax time to reap the benefits of an MCC. Once you calculate your annual tax credit, you can revise your W-4 with your employer to reduce the amount of federal taxes withheld from your pay check. That $1,998 tax credit could then translate into an additional $167 in your monthly paycheck–money you can put toward your mortgage payment, making your home even more affordable.
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