MCC Program Details
Mortgage Credit Certificate (MCC) Income and Purchase Price Limits
MCC Program Only - Effective June 1, 2023
Income and purchase price limits apply to non-targeted areas only. Contact us at HAL@NVRural.org to obtain the limits for targeted areas.
Max. Purchase Price
|Max. Income for Households with 1 or 2 People||Max. Income for Households with 3+ People|
Refinancing? Does the existing MCC need to be reissued? Yes!
MCCs must be reissued after refinancing in order for the Borrower to continue claiming the annual Federal Tax Credit. Nevada Rural Housing does not limit the number of times a Borrower may refinance, but the MCC benefit can never increase from the original MCC issued at the time the home is purchased. Please refer to IRS Form 8396 for specific instructions and information.
What documents must be submitted with the MCC Reissuance Application?
Copies of the following documents are required to be submitted to Nevada Rural Housing with the completed MCC Reissuance Application (refer to page 2 of the application):
- Existing MCC (contact us at MCC@NVRural.org if you can’t locate a copy of your existing MCC)
- Payoff Statement for the previous loan that was just refinanced
- Final Closing Disclosure for the new loan (obtained from the new lender prior to closing)
- Final Settlement Statement for the new loan (obtained from the title/escrow company/settlement agent after closing)
- A check in the amount of $395 payable to Nevada Rural Housing Authority, as fee for processing the MCC Reissuance Application and issuing the new MCC.Note: The $395 fee may be paid by personal check or money order from the Borrower, or the new lender may charge the MCC Reissuance Fee with other closing costs associated with the new loan and the title/escrow company/settlement agent can issue the check to Nevada Rural Housing Authority after closing.
Where do I mail the MCC Reissuance Application?
Nevada Rural Housing Authority
Attn: Home At Last
3695 Desatoya Drive
Carson City, NV 89701
Does the Borrower or the new Lender submit the MCC Reissuance Application to Nevada Rural Housing Authority?
The Borrower or the Lender may submit the MCC Reissuance Application to the Nevada Rural Housing Authority. The Borrower is required to complete and sign the Application.
Notice of Federal Recapture Tax
Buyers obtaining a Mortgage Credit Certificate (MCC) may be required to pay a Federal Recapture Tax if they meet every one of the following 3 provisions at the time of sale:
- The home is sold within the first 9 years of the purchase date, and
- A net profit is received from the sale of the home, and
- Household income at the time of sale exceeds the maximum income limit (disclosed with the MCC)
Borrowers are not subject to Federal Recapture Tax in the following circumstances:
- The home is transferred to a spouse, or former spouse, in connection with a divorce where no gain is included
- The home is destroyed by a casualty, and is repaired or replaced on its original site within 2 years after the end of the tax year when the casualty occurred
- The home is sold, or otherwise disposed of, as a result of the borrower’s death
- The home is refinanced – please note that refinancing does not cancel the recapture tax provision, which may still apply if the home is sold within 9 years
Borrowers are more likely to pay Federal Recapture Tax in the following circumstances:
- Employed in a field with high growth income potential
- Income is close to the maximum income limit at the time the home is purchased
- Purchasing a home in a high housing inflation environment
Marital status may change from single at time of purchase to married at time home is sold, or otherwise disposed of
If Federal Recapture Tax is owed, it is not collected at the time of the sale. The Borrower(s) must complete and file IRS Form 8828 with their Federal Tax Return for the year the home is sold, or otherwise disposed of (regardless of whether the Borrower owes Federal Recapture Tax). The IRS Form 8828 provides instructions to calculate and determine if Federal Recapture Tax is owed. Nevada Rural Housing Authority recommends consulting with a professional tax advisor to answer Federal Tax questions.
What is the Federal Recapture Tax?
It’s a Federal Tax a Borrower may be required to pay from the net profit received from the sale or disposition of their home. If required, Federal Recapture Tax is due at the time a Federal Tax Return is filed for the year in which the home is sold, or otherwise disposed of. The maximum Federal Recapture Tax is 6.25% of the original principal balance of the loan or 50% of the net profit earned on the sale of the home, whichever is less.
Notice: Nevada Rural Housing Authority’s Recapture Rebate Program ended on August 1, 2017. MCCs issued on or after August 1, 2017 are not eligible for a recapture tax rebate. For eligible MCCs, please email HAL@NVRural.org to request a rebate application.
Have questions? Email us.