What is Form 8396?
The mortgage interest credit if filed with Form 8396, which is an Internal Revenue Service (IRS) form allowing homeowners to claim the mortgage interest credit deduction. Individuals wishing to apply for mortgage interest credit on their taxes must complete this form. However, as of 2020, the interest deduction was limited to $ 750,000 for married persons filing jointly.
- This form is for homeowners to claim the mortgage credit deduction after receiving a mortgage credit certificate from a local or state government agency.
- The form can be used to calculate the credit for the current year as well as the amount to carry over for the following year.
- To benefit from the credit, the residence must meet specific price and value requirements in relation to the local housing market.
Form 8396 Tax strategies
Anyone to whom a mortgage credit certificate (MCC) has been issued by a local or state government agency must file this form. The agency will also send a copy of Form 8396 to homeowners to file with their taxes. It is normally issued to people with low or modest incomes.
MCCs are issued by national or local government units or agencies. The MCC form is issued as part of a qualified mortgage credit certificate program. This form can be used to determine the mortgage interest credit for the current year as well as the deferral credit for the following year.
The notifier must include all personal details, including name, address, name of mortgage credit certificate, certificate and certificate number, as well as their social security number on the form.
Under Part I, the notifier must determine the mortgage interest credit for the current year. Part II is used to determine the appropriation to carry over from the following year.
The IRS limits the credit to a maximum of $ 2,000.
There are certain restrictions associated with credit. The residence must meet specific price and value requirements in relation to the local housing market. Taxpayers who detail their deductions in Schedule A must offset the amount of their mortgage interest deduction with the amount of the credit requested.
The new mortgage credit certificate is issued when the loan is refinanced. Owners who sell their home within nine years may have to repay part of the credit issued. The domicile linked to the certificate issued must be in the same jurisdiction as the issuing agency. In addition, the property must be the principal residence of the declarant.
The state or local government issuing the certificate determines the amount of mortgage credit. This amount of variable credit translates into a variety of rates.
Form 8396 is different from Form 1098. Form 1098 is a mortgage declaration of interest sent by banks and financial institutions. The interest on the loan shown on the MCC is generally the same amount in box 1 of Form 1098.
Example of form 8396
Click this link to download a copy of Form 8396: Mortgage Interest Credit.