I was recently made aware of an OLD program called the “MCC” (Mortgage Credit Certificate). The MCC Program is a special benefit for the first time home buyers in the Portland, OR market. If you are a first time home buyer (defined by not having owned a home in the previous 3 tax years) AND you qualify for the income threshold* AND are purchasing a home in the city of Portland, the MCC program can provide a significant discount to the cost of your mortgage.
*INCOME REQUIREMENTS TO QUALIFY:
– Families of 1-2 must make less than $69,400/year
– Families of 3 or more must make less than $79,810/year
Here is how it works:
If you are reading this and you didn’t already know — the interest paid on your primary residence is a tax deduction. This means if you pay 10k in interest per year, the deduction would equal 10k of your income that you wouldn’t have to pay taxes on — it becomes TAX FREE INCOME. If you are in a 25% marginal tax bracket, this translates into $2,500 in real dollars to you. The MCC converts the first 20% of this deduction to a a tax credit. This means a dollar for dollar refund to you! So for the same homeowner with 10k in interest to work with, the MCC would translate into $2k cash back PLUS the remaining 80% as a deduction, or $1600 totaling an annual refund of $3,600, an almost 50% increase in tax benefit.
This benefit lasts for the ENTIRE LIFE OF THE MORTGAGE.
Only if you sell or refinance, would this benefit end.
There are some things to consider as well: There is a potential “recapture tax” for those who SELL the property in the first 9 years. If your income exceeds the maximum threshold at the time of sale (during the first 9 years), you could be forced to repay the city for the benefits received from your home’s profit. Please call me for details, and for more analysis about how this special first time home buyer program in Portland, OR could work for you.
Our company has been allowed to offer this MCC program in partnership with the city of Portland, and I have taken the class certifying me to consult with home buyers about it.
Also — Please refer to Portland Housing Bureau for more details about this program. Please also note that there are two designated “target areas” in NE Portland that qualify home buyers for the MCC even if you ARE NOT a first time home buyer.
The Oregonian just published an article about this MCC first time home buyer program in Portland.
Read more about first time buyer programs in Oregon.