Riverside County Issues $1.45M in Homebuyer Tax Credits

More than 50 low- and moderate-income families in Murrieta, Temecula and other communities were able to purchase homes through the Riverside County Economic Development Agency’s Mortgage Credit Certificate Program during the 2012-2013 fiscal year, it was announced.

A total of $1.45 million in tax credits made it possible for 54 families to purchase homes in Murrieta, Lake Elsinore, Riverside, Calimesa, Corona, Temecula, Hemet, Eastvale, Perris, Beaumont, Winchester, among other cities, according to a news release.

Administered through the Riverside County EDA's Housing Department, an MCC entitles qualified homebuyers to reduce the amount of their federal income tax liability by an amount equal to a portion of the interest paid during the year on a home mortgage, Executive Director Tom Freeman explained.

“This tax credit allows the buyer to qualify more easily for a loan by increasing the effective income of the buyer,” Freeman said.

The MCC Program provides for a 15-percent rate, which can be applied to the interest paid on the mortgage loan. The borrower can claim a tax credit equal to 15 percent of the interest paid during the year.

Since the borrower’s taxes are being reduced by the amount of the credit, this increases the take-home pay by the amount of the credit. The buyer takes the remaining 85-percent interest as a deduction.

When underwriting the loan, a lender takes this into consideration and the borrower is able to qualify for a larger loan than would otherwise be possible. If the amount of the MCC exceeds the homebuyer’s tax liability, the unused portion of the credit can be carried forward to the next three years or until used, whichever comes first.