TaxSmart Mortgage Credit Certificate Program

Attention:  The TaxSmart program is currently closed to homebuyers and will reopen to new applicants this spring.

Effective May 30, 2019, the Department will begin accepting applications from lenders who wish to particiapte in the Series 2019 TaxSmart Mortgage Credit Certificate (MCC) Porgram.

Series 2019 Lender Participation Application


TaxSmart is a Mortgage Credit Certificate (MCC) program that provides a federal income tax credit to qualified homebuyers. A tax credit is a direct reduction of taxes due. Under the program, a homebuyer would receive a MCC to reduce income taxes by an amount equal to 25 percent of the interest paid on a mortgage. The tax credit may be claimed each year the home buyer continues to live in a home financed under this program. The homebuyer will be charged a $375.00 application fee of which $225.00 is due at loan closing to the City of Chicago, Department of Housing. A charge of $100.00 will apply to replace or reissue a Series 2016 MCC Certificate for any cause including, and without limitation, due to being lost or misplaced, being damaged, a refinance of the existing mortgage, or any other reason allowed by the Code or the Program Regulations.

Federal law requires that a home buyer satisfy each of the following guidelines:

First-Time Homebuyer or Target Area Purchase
Any person who has not owned a principal residence at any time during the three years prior to closing a loan under this program is considered a first-time home buyer. Non first-time homebuyers are also eligible if they purchase a home in a designated target area.

Income
Federal law imposes maximum limits on the annual gross income of home buyers.

Purchase Price
Federal law also imposes limits on the purchase price of homes financed under the program.

Principal Residence
The home buyer must occupy the home as a principal residence within a reasonable period which, under most circumstances, may not exceed 60 days after financing is provided. A principal residence is a home occupied primarily for residential purposes and does not include a home used as an investment property, as a recreational home or a home in which 15 percent or more of its total area is used for a trade or business.

One-to Four-Family Home
Each residence financed must contain 1-4 units. A one-family residence includes a detached home, one unit of a duplex, a townhouse or a condominium unit. If the residence is a 2-4 unit building, one unit of the residence must be the principal residence of the building owner and the residence must have been first occupied for residential purposes at least five years prior to applying for a mortgage loan financed in connection with the MCC.

New Mortgage
The mortgage loan financed in connection with a MCC certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).

Program Area
In order to be eligible for a MCC certificate, the home financed under the program must be located in the City of Chicago.

Mortgage credit certificates are issued to eligible home buyers on a first-come, first-served basis. The certificates are available in connection with any type of mortgage loan (except loans from tax-exempt bond programs), including fixed rate and adjustable rate mortgages.

First-time homebuyers must receive pre-purchase counseling to be eligible and must provide a certificate of completion of pre-purchase counseling with their applications. Applications and additional information will be available from participating lenders.

Purchase Price Limits*
                                                 Non-Target Area                                               Target Area
  Existing New Construction Existing New Construction
One Unit $336,706 $336,706 $411,529 $421,529
Two Unit $431,033 Ineligible $526,818 $526.818
Three Unit $521,033 Ineligible $636,818 Ineligible
Four Unit $647,493 Ineligible $791,380 Ineligible

*These limitations are periodically adjusted and do not apply to mortgage credit certificates issued with respect to qualified home improvement loans.

 

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