While all homeowners benefit from federal and state tax deductions associated with their house, first-time buyers in Virginia may be eligible for a program that boosts the tax benefits of purchasing property.

The Virginia Housing Development Authority (VHDA) has introduced a Mortgage Credit Certificate program that allows eligible borrowers to claim a tax credit for part of the mortgage interest they pay. Unlike an income tax deduction, an MCC is a dollar-for-dollar credit against the federal income tax they pay.

The credit is equal to 20 percent of the mortgage interest paid. In addition, the other 80 percent of mortgage interest paid is still eligible for a tax deduction. The MCC is effective for the life of the mortgage as long as the buyers live in the home.

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To be eligible, you must:
• Be a first-time home buyer or not have owned a home as a primary residence within the past three years
• Have income at or below the maximum limit in Northern Virginia, which is $121,900 for a household with two or fewer people
• Purchase a home priced at or under $500,000
• Live in the home as your primary residence

If you sell your residence in the first nine years of homeownership, you could be subject to a federal recapture tax.

You can apply for an MCC through an approved participating lender on the VHDA list, found here. For more information, click here or call 804-343-5926.

Michele Lerner is a freelance writer. To pass on a tip or news item, contact us at realestate@washpost.com and put “Town Square” in the subject line.