Form 8396

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Form 8396: Mortgage Interest Credit

What is Form 8396?

Form 8396 is the IRS form used to claim the mortgage interest credit. The credit helps lower- and moderate-income homeowners afford homeownership by allowing them to claim a portion of mortgage interest paid, but only if they were issued a Mortgage Credit Certificate (MCC) by a state or local government agency. The mortgage interest credit is limited to $2,000 per year.

Who can file

You can file Form 8396 only if you received an MCC issued under a qualified mortgage credit certificate program. MCCs are typically issued to eligible buyers of a primary residence with a new mortgage and are generally targeted to lower- and moderate-income households.

What you’ll need to file

When completing Form 8396, have the following information:
* Your name and Social Security number
* The MCC issuer’s name
* The MCC certificate number and issue date
* The mortgage interest amount (often matches Box 1 on Form 1098)

How to file

  • Complete Part I of Form 8396 to calculate the current year’s mortgage interest credit (the MCC shows the rate to use).
  • Complete Part II to determine any unused credit carryforward to the following year.
  • Attach Form 8396 to your federal return (Form 1040, 1040‑SR, or 1040‑NR).
  • Keep a copy of Form 8396 for future years if you have carryforward amounts.

Special considerations and restrictions

  • The property must be your primary residence.
  • The residence must meet local price/value limits and be located within the jurisdiction of the agency that issued the MCC.
  • If you itemize on Schedule A, you must reduce your mortgage interest deduction by the amount of the credit claimed.
  • If you refinance, a new MCC is issued; you may continue to claim the credit if you remain eligible.
  • Selling the home within nine years after issuance may trigger a requirement to repay some of the credit.

Form 8396 vs. Form 1098

  • Form 8396: Used to claim the mortgage interest credit based on an MCC.
  • Form 1098: Issued by lenders to report mortgage interest and related expenses paid during the year.
    The loan interest reported on the MCC is usually the same amount shown in Box 1 of Form 1098, but the two forms serve different purposes.

FAQs

  • Do I need an MCC to claim the credit?
    Yes — you must have an MCC issued by a state or local government agency.
  • Do I file Form 8396 every year?
    Yes, file each year you qualify to claim that year’s credit.
  • What if I refinance?
    Refinancing typically results in issuance of a new MCC; you can claim the credit going forward if you meet eligibility rules.

Bottom line

Form 8396 lets eligible homeowners with a Mortgage Credit Certificate reduce their federal tax by claiming part of the mortgage interest paid (up to $2,000/year). Confirm eligibility, keep the MCC and Form 8396 records for carryforwards, and attach the completed form to your annual tax return.