The Mortgage Interest Credit is a nonrefundable credit intended to help lower-income individuals own a home. A taxpayer may claim the mortgage interest credit if
- a qualified mortgage credit certificate (MCC) was issued by a state or local governmental unit or agency under a qualified mortgage credit certificate program,
- the home to which the certificate relates is the taxpayer's main home,
- the home is located in the jurisdiction of the governmental unit that issued the certificate, and
- the interest on the mortgage was not paid to a related person.
If a taxpayer qualifies, they can take the credit each year for part of the home mortgage interest they pay. The credit is figured on Form 8396.
Recapture of Credit
If a taxpayer buys a home using an MCC and sells it within 9 years, they may have to recapture (repay) some of the credit. See Pub. 523, Selling Your Home; and Form 8828, Recapture of Federal Mortgage
TaxSlayer Pro Desktop Program - To access the Mortgage Interest Credit, from the Main Menu of the tax return (Form 1040) select:
- Credits Menu
- Mortgage Interest Credit (8396)
- You will be prompted for the home's address and for information about the MCC.
- Enter the amount of mortgage interest paid. If another individual (other than the spouse on a MFJ return) held an interest in the home, enter only the taxpayer's and spouse's share of the interest.
- Enter the credit rate shown on the MCC.
- Enter credit carryforwards from prior years, if any.
Unused credit can be carried forward three years.
TaxSlayer ProWeb - To access the Mortgage Interest Credit, from the Federal Section of the tax return select:
- Credits Menu
- Mortgage Interest Credit Form 8396
- Select Credit Certificate or Form 1098 depending on which form the taxpayer received
- Complete all required information as prompted
Note: This is a guide to entering the mortgage interest credit into the TaxSlayer Pro program. It is not intended as tax advice.