Publication 530 - Tax Information For Homeowners

Refinancing

Who Cannot Claim the Credit

First-Time Homebuyer

If you refinance your original mortgage loan on

You cannot claim the credit for a home pur-

Credit

which you had been given an MCC, you must

chased in 2011 if any of the following apply.

get a new MCC to be able to claim the credit on

1. The purchase price of the home is more

the new loan. The amount of credit you can

The following paragraphs summarize the

than $800,000.

claim on the new loan may change. Table 2

first-time homebuyer credit. For more details,

summarizes how to figure your credit if you refi-

see Form 5405 and its separate instructions.

2. Your modified adjusted gross income is

nance your original mortgage loan.

$145,000 or more ($245,000 or more if

Who Can Claim the Credit

An issuer may reissue an MCC after you

married filing jointly).

refinance your mortgage. If you did not get a

3. You cannot claim the credit for any year for

new MCC, you may want to contact the state or

In general, you may be able to claim the credit

which you can be claimed as a dependent

local housing finance agency that issued your

for a home purchased in 2011 if you are a

on another person’s tax return.

first-time homebuyer or a long-time resident of

original MCC for information about whether you

4. You (and your spouse if married) are

the same main home (defined next).

can get a reissued MCC.

under age 18 on the date of purchase.

First-time homebuyer. You are considered a

Year of refinancing. In the year of refinanc-

5. You are a nonresident alien.

first-time homebuyer if you meet all of the follow-

ing, add the applicable amount of interest paid

6. Your home is located outside the United

ing requirements.

on the old mortgage and the applicable amount

States.

of interest paid on the new mortgage, and enter

1. You (or your spouse if married) are, or

7. Neither you nor your spouse (if married)

the total on Form 8396, line 1.

were, a member of the uniformed services

was on qualified official extended duty

If your new MCC has a credit rate different

or Foreign Service or an employee of the

outside the United States as a member of

from the rate on the old MCC, you must attach a

intelligence community who meets the re-

the uniformed services or Foreign Service

statement to Form 8396. The statement must

quirements explained under Line D in the

or an employee of the intelligence commu-

show the calculation for lines 1, 2, and 3 for the

Form 5405 instructions.

nity.

part of the year when the old MCC was in effect.

2. You purchased your main home located in

It must show a separate calculation for the part

8. You acquired the home by gift or inheri-

the United States:

of the year when the new MCC was in effect.

tance.

Combine the amounts from both calculations for

a. After December 31, 2010, and before

9. You acquired your home from a related

line 3, enter the total on line 3 of the form, and

May 1, 2011, or

person.

write “See attached” on the dotted line.

b. After April 30, 2011, and before July 1,

10. You acquired your home from a person

2011, if you entered into a binding con-

related to your spouse.

New MCC cannot increase your credit. The

tract before May 1, 2011, to purchase

credit that you claim with your new MCC cannot

the home before July 1, 2011.

be more than the credit that you could have

Amount of the Credit

claimed with your old MCC.

3. You (and your spouse if married) did not

In most cases, the agency that issues your

own any other main home during the

First-time homebuyer. Generally, the credit

new MCC will make sure that it does not in-

3-year period ending on the date of

is the smaller of:

crease your credit. However, if either your old

purchase.

•

$8,000 ($4,000 if married filing sepa-

loan or your new loan has a variable (adjustable)

4. You do not meet any of the conditions

rately), or

interest rate, you will need to check this yourself.

listed under Who Cannot Claim the Credit.

In that case, you will need to know the amount of

•

10% of the purchase price of the home.

the credit you could have claimed using the old

Long-time resident of the same main home.

MCC.

Long-time resident of the same main home.

You are considered a long-time resident of the

There are two methods for figuring the credit

Generally, the credit is the smaller of:

same main home if you meet all of the following

you could have claimed. Under one method, you

•

requirements.

$6,500 ($3,250 if married filing sepa-

figure the actual credit that would have been

rately), or

allowed. This means you use the credit rate on

1. You (or your spouse if married) are, or

the old MCC and the interest you would have

•

10% of the purchase price of the home.

were, a member of the uniformed services

paid on the old loan.

or Foreign Service or an employee of the

If your old loan was a variable rate mortgage,

intelligence community who meets the re-

Phase-out of the credit. You are allowed the

you can use another method to determine the

quirements explained under Line D in the

full amount of the credit if your modified adjusted

credit that you could have claimed. Under this

Form 5405 instructions.

gross income (MAGI) is $125,000 or less

method, you figure the credit using a payment

($225,000 or less if married filing jointly). The

2. You (and your spouse if married) previ-

schedule of a hypothetical self-amortizing mort-

phase-out of the credit begins when your MAGI

ously owned and used the same main

gage with level payments projected to the final

exceeds $125,000 ($225,000 if married filing

home as your main home for any 5-con-

maturity date of the old mortgage. The interest

jointly). The credit is eliminated completely when

secutive-year period during the 8-year pe-

rate of the hypothetical mortgage is the annual

your MAGI reaches $145,000 ($245,000 if mar-

riod ending on the date you purchased

percentage rate (APR) of the new mortgage for

ried filing jointly).

your new main home.

purposes of the Federal Truth in Lending Act.

Modified adjusted gross income (MAGI).

3. You purchased your new main home lo-

The principal of the hypothetical mortgage is the

Your modified adjusted gross income is the

cated in the United States:

remaining outstanding balance of the certified

amount from Form 1040, line 38, increased by

mortgage indebtedness shown on the old MCC.

a. After December 31, 2010, and before

the total of any:

May 1, 2011, or

You must choose one method and use

•

Exclusion of income from Puerto Rico, and

it consistently beginning with the first

b. After April 30, 2011, and before July 1,

•

Amount from Form 2555, Foreign Earned

tax year for which you claim the credit

CAUTION

2011, if you entered into a binding con-

Income, lines 45 and 50; Form 2555-EZ,

based on the new MCC.

tract before May 1, 2011, to purchase

Foreign Earned Income Exclusion, line 18;

the home before July 1, 2011.

As part of your tax records, you should

and Form 4563, Exclusion of Income for

keep your old MCC and the schedule

TIP

Bona Fide Residents of American Samoa,

4. You do not meet any of the conditions

of payments for your old mortgage.

line 15.

listed under Who Cannot Claim the Credit.

Publication 530 (2011)

Page 9

Publication 530 - Tax Information For Homeowners - 2011 Page 9

Related Articles

Related forms

Related Categories