Last Updated : January 14, 2009
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8396

Form 8396

Mortgage Interest Credit

Purpose Of The Form :
Form 8396 is used to figure the mortgage interest credit for 2006 and any credit carry forward to 2007.

Who May Claim The Credit :
Taxpayer may request a credit or refund if he/she:

  • Was issued a Qualified Mortgage Credit Certificate (MCC) by the state or local governmental unit or agency under a Qualified Mortgage Credit Certificate Program.
  • The Home to which the certificate related must be your main home and also must be located in the jurisdiction of the governmental unit that issued the certificate.
  • If the interest on the Mortgage was paid to a related person, you cannot claim the credit.

Recapture Of The Credit :
If you buy a home using an MCC and sell it within 9 years , you may have to recapture (Repay) some of the credit and may need to complete Form 8828 to calculate any MCC Recapture Tax.
For More details, refer publication 523, Selling Your Home.

Address of your main Home :
If the address of your main Home to which the Qualified Mortgage Certificate relates is different than the address shown on Form 1040 , enter the street and ZIP code , City And State manually.

Name of issuer of mortgage credit certificate :
Enter the name of the issuer of the mortgage credit certificate as shown in the certificate issued to you by governmental unit or agency.

Mortgage credit certificate number :
Enter the number of the mortgage credit certificate as shown in the certificate issued to you by governmental unit or agency.

PART-I CURRENT YEAR MORTGAGE INTEREST CREDIT

Line 1:
Enter the interest you paid during the year on the loan amount (certified indebtedness amount) shown on Mortgage Credit Certificate (MCC). In most cases , this will be the amount in box 1 on form 1098 , or on a similar statement you received from yourMortgage Holder. Refer Publication 530 for an example of How to allocate the interest.

Line 2:
Enter the certificate credit rate shown on the Mortgage Credit Certificate. The certificate Credit rate cannot be less than 10% or more than 50%.

Line 3:
If the certificate credit rate shown on line 2 is more than 20% , do not enter more than $2000 on line 3 .If you and someone Else (Other than your Spouse if filing Jointly)held an interest in the home , the $2000 limit must be allocated to each owner in the proportion to the interest held.

If you Itemize your deductions on Schedule A , you must reduce the amount of home mortgage interest you would otherwise deduct on schedule A by the amount on Line 3 Of the Form 8396 and report the reduced amount on Schedule A. You must do this even if part of the amount on line 3 is carried forward  to 2007.

If MCC mortgage was refinanced , and the reissued credit certificate rate is different, attach  a statement detailing the separate calculations for Lines 1, 2 and 3 on both the original MCC and the Reissued MCC. Enter the combined Total as overridden on Line 3.

Line 4 through Line 6 :
Enter the amount of credit carryforwards from 2003, 2004 and 2005 on lines 4 through 6.

Line 7 :
This line is automatically calculated in our package as it is the sum of above line 3 to line 6.

Line 8 :
Amount on this line transfers from Form 1040, line 46 (or Form 1040NR, line 43).

Line 9 :
Amount on this line transfers from Form 1040, line 47 through 51 and line 53 plus any credit from Form 5695 , line 12  (or Form 1040NR lines 44 through 46 and line 48 plus any credit from Form 5695 , line 12 ).

Line 10 :
This line is automatically calculated in our package . Here line 9 is subtracted from line 8. If the result is zero or less enter zero on line 11 and complete Part- 2.

Line 11 :
This line is automatically calculated in our package. On this line smaller of line 7 or line 10 is the Current Year Mortgage Interest Credit.

PART-II : MORTGAGE INTEREST CREDIT CARRYFORWARD TO  2007.
 
If the amount on line 11 is less than the amount on Line 7 , You may have an unused credit  to carry forward to the next 3 tax years or until used, whichever comes first. The current year credit is used first  and then the prior year credits, beginning with the earliest prior year. Credits can only be carried forward for three years or will be lost.
 
If you are subject to the $2000 credit limit because your certificate credit rate is more than 20% , No amount over $2000 limit (or your prorated share of the $2000 if you must Allocate the credit )may be carried forward for use in a later Year.

Line 12 :
This line is automatically calculated in our package. It is addition of line 3 and line 4 Of part- I .

Line 13 :
Amount transfers from line 7  of part-I of this form.

Line 14 ;
This line is automatically calculated in our package.It is maximum of line 11 or line 12.

Line 15 :
This line is automatically calculated in our package . Here line 14 is subtracted from
 line 13.

Line 16 :
This line is automatically calculated in our package . It is lower / minimum of  line 6 from part-I or line 15 calculated above .

Line 17 :
This line is automatically calculated in our package . Here line 16 is subtracted from line 15.

Line 18 :
This line is automatically calculated in our package . It is lower / minimum of  line 5 from part-I or line 17 calculated above .

Line 19 :
This line is automatically calculated in our package . Here line 11 is subtracted from line 3 of part -I.

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