MCC Example by zcc46658


									               MCC Example
               Here is how the Darrell Smurd family can benefit from
               purchasing a home under the Mortgage Credit Certificate
               Program. (Note: Figures here are rounded for simplification of Example)

               Family Income:       $6,250 per month
               Loan Amount:         $350,000
               Interest Rate:       6.50%

(1)   Determine the First Year Interest Payment
      $350,000 x .065 = $22,750
      (Loan Amount x Interest Rate)

(2)   Determine the Annual Mortgage Credit
      $22,750 x .20 = $4,550
      (First Year Interest Payment x 20% MCC Credit rate)

(3)   Determine Monthly Mortgage Credit
      $4,550 ÷ 12 = $380
      (Annual Mortgage Credit ÷ 12 months)

                                                                       Affordable Housing Applications, Inc.
                             FOUR STEPS TO TAX SAVINGS
The Smurd family income is $6,250 per month, earned                                                                    4)     With MCC:
through Darrell’s employment. This illustration
shows how Darrell’s take-home pay will be                                                                                     $6,250 mo. earnings
increased with the help of a mortgage credit equal                                                                             - 620 withheld for taxes
to about $380 per month.                                                                                                      $5,630 take home pay

                                                                                                                              Annual Tax Debt                Withheld
                                                                                                                                $7,450                        $7,450

                                                                          3)     New Estimate Annual Taxes                  4. With MCC, Darrell earns $6,250/mo
                                                                                                                               and nets $5,630/mo
                                                                                 $12,000 Annual Tax Debt                      because:
                                                                                   -4,550 MCC Annual Credit
                                                                                 $7,450 New Annual Tax Debt                   Now only $7,450/yr or $620/mo. is
                                                                                                                              withheld and owed in taxes.

                                                                                 ($7,450 ÷ 12 = $620/mo.)

                                                                               2-3. Darrell buys home and receives
                                                                                    MCC giving him a tax credit of:
                                      2)     Tax Credit Received
                                             Under MCC Program:                    $4,500/yr or $ 380/mo.

                                                                                   Darrell’s tax debt is reduced to:
                                                $4,550 per year                    $7,450 /yr or $620/mo.
                                                                                   Darrell instructs employer to
                                               Or $380 per month                   withhold only $620/mo. In federal
                                                                                   taxes from his pay.

1)    Without   MCC
      $6,250    mo. earnings               1. Without MCC:
                                              Darrell earns $6,250/mo.
       -1,000    withheld for taxes
                                              and nets $5,250/mo
      $5,250    take home pay
                                             because :
Annual Tax Debt        Withheld
                                             $12,000/yr or $1000/mo is                                                            Affordable Housing Applications, Inc.
                                                                                                                                  8130 La Mesa Blvd #806
                                             withheld and owed in taxes
     $12,000          $12,000                                                                                                     La Mesa, California 91941
                                                                                                                                  Phone (619) 469-0270
                     ($1,000 x 12)                                                                                                On the web:

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