James D. Lynch
The Mortgage Interest Credit
The mortgage interest credit is a nonrefundable credit for mortgage interest paid. The credit is intended to help lower-income earners afford home ownership. Income limits vary by location.
Form 8396 is the tax form used by homeowners to claim the mortgage interest credit. Taxpayers can only claim the credit if they receive a document called a mortgage credit certificate (MCC) from a state or local government agency.
The IRS limits the mortgage interest credit to a maximum of $2,000 per year. If the total amount of mortgage interest paid is more than the amount of the credit allowed on Form 8396, the taxpayer can claim an itemized deduction on Schedule A for the remaining amount of interest.