MCC tax credit usage on a rental property

Forum|Forum|6 years ago
January 30, 2020
2 replies
0 views

I have a MCC tax credit issued by washington state for a home i purchased in 2015. I have lived in this home until mid year 2018 to where i converted it to a full time rental property. In 2019 the property was rented the entire year. Am i still able to claim the MCC tax credit for my property? I can't seem to find any info on this anywhere.

Rental Property

Best answer by BrittanyS

It wouldn't be void, you just can't use the MCC while it is a rental (secondary residence). If you were to convert it back to your primary residence and live there full time you would be able to claim MCC again. That is the way I understand it anyway. The language around MCC usage is super vague in my opinion.

I have reached out to the Senior Program Compliance Administrator Homeownership Division with the Washington State Housing Finance Commission, Christian Hayes.

Per his response, If you move out and rent the home the MCC is no longer valid from the year you move.

However, as micknorris stated, the recapture tax would only occur if you sold the property within the first 9 years.

@passthebiscuits

@micknorris

AmyC

Employee

I found this from Washington state regarding MCC is not currently supported or offered.. I can't find more, but I do know that in other states, the house must be your primary residence.

If you have questions about the Mortgage Credit Certificate Program, please call us them at 800.767.4663 or email info@heretohome.org.

From <https://www.wshfc.org/buyers/MCCprogram.htm>

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

micknorrisAuthor

I already have the mcc from 2014.

MAK70

No, if you are using the property as a rental property, you cannot use the MCC.

@micknorris

BrittanyS

No, if your home is not used as your primary residence for which the MCC program was issued, there could be a recapture tax applied for that tax year.

A re-issuance for the MCC would have to occur to continue receiving the credit for the property, as the MCC is currently not being offered in 2022. There is a checklist for the re-issuance of the MCC. See the link below for the Checklist:

MCC Re-Issuance Package Checklist

@passthebiscuits

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

passthebiscuits

Thanks for your reply, @BrittanyS ! Follow-up question: I used an MCC between 2019-2021 while my house was my primary residence. As of June 2022, my house is no longer my primary residence and is being used as a rental (I currently live with my parents and do not own a secondary property). Does this mean my MCC is null and void?

HopeS

No, if you are using the property as a rental property you cannot use the MCC. To qualify for the credit you must meet income and purchase price restrictions, and the home must be used as your primary residence.

See also page 4 of the attached FDIC guidance which states under the Occupancy Section "Borrowers must use the home as their principal/primary residence."

Mortgage Tax Credit Certificate

@passthebiscuits

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"