Home mortgage interest payments are tax deductible, but for first time home buyers - there may be an added advantage. It's called the Mortgage credit certificate."The mortgage credit certificate or the MCC provides qualified first time homebuyers a direct federal tax credit of up to 20 percent of the mortgage interest that they pay each year on their mortgage for the life of their loan as long as the property is used as their primary residence," said Central Pacific Bank's Erin Palmer.
What about the other 80 percent?
"The remaining 80 percent of the mortgage interest that they pay for their loan continues to qualify as an itemized tax deduction," Palmer explained.
We say the potential home buyers must be first timers - but the fact is, there is a big loophole. You must not have owned a home in the past three years.
"They must not have owned a home in the last three years, and number two, their income must fall within specific income limits," Palmer said. "On Oahu, the income limit is $98,040 for a household of two people or less. And it's $114,380 for a household of three people or more."
And the house in question must fall within a certain range - in the case of Oahu, a rather generous $793,750. Getting a Mortgage Credit Certificate, however, is best done with the help of a reputable lender.
"So, MCC'S are only available through participating lenders who will work with the home buyer in obtaining their financing in addition to the MCC and Central Pacific Homeloans is a participating MCC lender," said Palmer.
