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PUBLIC NOTICE TO QUALIFIED HOMEBUYERS
MONTANA BOARD OF HOUSING
2020 MORTGAGE CREDIT CERTIFICATE PROGRAM The Montana Board of Housing (“MBOH”) is proposing to implement a program for Mortgage Credit Certificates (“MCCs”) in Montana (the “2020 MCC Program”). MCCs are a form of federal income tax credits to qualified homebuyers. No sooner than 90 days following this Notice, MBOH will issue MCCs to qualified homebuyers in Montana according to the guidelines noted below. Purchasers of a new or existing single‑family home located in Montana may apply for an MCC through participating lenders when they apply for financing from the lender for the purchase. An MCC cannot be issued in connection with a mortgage loan that refinances or pays off an existing mortgage or land contract (except for certain construction period and temporary loans) or with a mortgage loan provided from proceeds of tax‑exempt bonds. The amount of the credit will be 20% of the yearly interest paid or accrued on a qualified mortgage. If the credit allowable under the 2020 MCC Program for any taxable year exceeds the qualified homebuyer’s tax liability for such taxable year, then such excess credit may be carried over to each of the three succeeding taxable years and, subject to certain limitations, may be added to the credit allowable under the 2020 MCC Program for that succeeding year. The qualified homebuyer may reduce the amount of monthly federal income tax withheld by filing a revised IRS W‑4 Employee’s Withholding Allowance Certificate in order to have more disposable income with which to make loan payments. Use of the credit will reduce the deduction for home mortgage interest on the homebuyer’s federal income tax return. Current federal tax law may require a payment to the federal government of a “recapture” tax if the homebuyer sells or otherwise transfers his or her home to someone else within nine years after the MCC is issued. The MCC is issued at the time of the closing of a mortgage loan. The recapture tax represents a portion of the “federally subsidized amount” of the mortgage loan, calculated in accordance with federal tax law. The recapture tax may not exceed 50% of the gain realized on the sale or transfer of the home, and it would become a part of the homebuyer’s tax liability for the year that the home is sold or transferred. The homebuyer may not have to pay part or all of the recapture amount if his or her income, at the time of the sale or transfer, is less than a prescribed amount at the time of sale or transfer. To be eligible for an MCC, the homebuyer’s gross annual household income may not exceed the limits set forth below. Gross annual household income is the total of all income, from whatever source, of all persons age 18 and older who will reside or who intend to reside in the residence. The maximum family incomes for all borrowers, as established by MBOH, currently range from $70,500 to $104,400 for one‑ or two‑person families, and from $81,075 to $121,800 for three‑or‑more‑person families. Income and eligibility standards must be reviewed at least annually and may be revised by MBOH at any time. Limits on income will in no event exceed the maximum levels, if any, permitted by the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”). The maximum purchase prices for homes, as established by MBOH, currently range from $283,348 to $454,142. Homebuyers also must meet the following eligibility requirements: 1. Qualified homebuyers must occupy the residence as their principal residence within 60 days after it is financed by a participating lender. The MCC will expire on the date that the residence ceases to be the principal residence of the qualified homebuyer. 2. Qualified homebuyers must not have had an ownership interest in a principal residence within the preceding three years, except for qualified homebuyers purchasing homes in federally designated targeted areas or certain veterans, who are exempt from this requirement. 3. No more than 15% of the residence being purchased can be used in a trade or business used in accordance with the Code. The total credit election amount of the 2020 MCC Program is $15,000,000. Purchasers may obtain an MCC in connection with financing from any approved lender, including banks, savings and loan associations, mortgage banking firms and credit unions. MCC applications will be accepted on a first‑come, first‑served basis. The application must be made through a participating lender. A current list of participating lenders is available to the public from the undersigned. There is no allocation of MCCs by lender; however, for the first year of the 2020 MCC Program, 20% will be set aside for mortgage loans in targeted areas. Homebuyers must be qualified for an MCC pursuant to the Code and the guidelines, rulings and interpretations issued by the Internal Revenue Service which shall control in the event of a conflict with other requirements. The homebuyer must meet the credit and underwriting criteria established by the participating lender who provides the mortgage loan. MBOH does not originate mortgage loans in connection with MCCs. The applicant must sign all documents and affidavits which are needed to demonstrate the homebuyer’s eligibility for an MCC. For more information on the 2020 MCC Program or for a copy of the participating list of lenders, contact the Montana Board of Housing, 301 South Park Avenue, Helena, Montana 59601 or call (406) 841‑2849. Dated: November 5, 2019 MONTANA BOARD OF HOUSING By /s/ Bruce Brensdal Bruce Brensdal, Executive Director
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