8396 M ortgage Interest Credit

2007 Form 8396, Mortgage Interest Credit
Purpose: This is the first circulated draft of the 2007 Form 8396 for your review and
comments.
TPCC Meeting: None, but one can be arranged if requested.
Prior Revisions: The 2006 Form 8396 can be viewed by clicking on the following link:
http://publish.no.irs.gov/FORMS/PUBLIC/PDF/62502Y06.PDF
Other Products: Circulations of draft tax forms, instructions, notices, and publications
are posted at: http://taxforms.web.irs.gov/draft_products.html
Comments: Please email, fax, call, or mail any comments by May 11, 2007.

Changes to 2007 Form 8396, Mortgage Interest Credit
•
•
•

All years were updated
The references on line 9 to Forms 1040 and 1040NR, were revised to reflect the
limits per IRC 25(e)(1)(C)(ii).
Two new lines 11 and 12 have been added, the remainder of the form was
renumbered, and the instructions were revised to include line 11 per IRC 26(a)(1).

FROM:

Email:

Phone:

Robyn Magruder-Matthews

robyn.t.magruder-matthews@irs.gov

202-283-3725
Fax:

202-283-4544

Room:

Date:
04/13/2007

NCFB
C-347

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Form

I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8396, PAGE 1 of 2
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE, WRITING, SUB. 20
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: NONE
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

8396

Department of the Treasury
Internal Revenue Service

Action

Date

O.K. to print
Revised proofs
requested

OMB No. 1545-0074

Mortgage Interest Credit

2007

(For Holders of Qualified Mortgage Credit Certificates Issued by
State or Local Governmental Units or Agencies)
©

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Attach to Form 1040 or 1040NR.

Name(s) shown on your tax return

Signature

©

Attachment
Sequence No.

See instructions on back.

138

Your social security number

Enter the address of your main home to which the qualified mortgage certificate relates if it is different from the address shown on your tax return.

Name of Issuer of Mortgage Credit Certificate

Part I
1

Mortgage Credit Certificate Number

Issue Date

Current Year Mortgage Interest Credit

4

Interest paid on the certified indebtedness amount. If someone else (other than your spouse if
filing jointly) also held an interest in the home, enter only your share of the interest paid
Enter the certificate credit rate shown on your mortgage credit certificate. Do not enter the
interest rate on your home mortgage
If line 2 is 20% or less, multiply line 1 by line 2. If line 2 is more than 20%, or you refinanced your
mortgage and received a reissued certificate, see the instructions for the amount to enter.
You must reduce your deduction for home mortgage interest on Schedule A (Form 1040)
by the amount on line 3.
Enter any 2004 credit carryforward from line 18 of your 2006 Form 8396

5

Enter any 2005 credit carryforward from line 16 of your 2006 Form 8396

5

6

Enter any 2006 credit carryforward from line 19 of your 2006 Form 8396

6

7

Add lines 3 through 6

7

8

Enter the amount from Form 1040, line 44, or Form 1040NR, line 41

8

9

1040 filers:

2
3

Enter the total of the amounts from Form 1040, lines 47 through 49 and
Form 5695, line 17
1040NR filers: Enter the total of the amounts from Form 1040NR, line 44 and Form 5695,
line 17

}

1
2
3

4

9

10

Subtract line 9 from line 8. If zero or less, enter -0- here and on line 13 and go to Part II

10

11

Enter the amount from Form 6251, line 31 (see instructions)

11

12

Subtract line 11 from line 10. If zero or less, enter -0- here and on line 13 and go to Part II

12

13

Current year mortgage interest credit. Enter the smaller of line 7 or line 12. Also include
this amount in the total on Form 1040, line 54, or Form 1040NR, line 49, and check box a on
that line

13

Part II

%

Mortgage Interest Credit Carryforward to 2008. (Complete only if line 13 is less than line 7.)

14

Add lines 3 and 4

14

15

Enter the amount from line 7

15

16

Enter the larger of line 13 or line 14

16

17

Subtract line 16 from line 15

17

18

2006 credit carryforward to 2008. Enter the smaller of line 6 or line 17

18

19

Subtract line 18 from line 17

19

20

2005 credit carryforward to 2008. Enter the smaller of line 5 or line 19

20

21

2007 credit carryforward to 2008. Subtract line 13 from line 3. If zero or less, enter -0-

21

For Paperwork Reduction Act Notice, see back of form.

Cat. No. 62502X

Form

8396

(2007)

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8396, PAGE 2 of 2
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE, WRITING, SUB. 20
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: NONE
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8396 (2007)

General Instructions
Purpose of Form
Use Form 8396 to figure the mortgage
interest credit for 2007 and any credit
carryforward to 2008.

Who May Claim the Credit
You may claim the credit only if you
were issued a qualified Mortgage Credit
Certificate (MCC) by a state or local
governmental unit or agency under a
qualified mortgage credit certificate
program.
Certificates issued by the
Federal Housing
Administration, Department
CAUTION
of Veterans Affairs, and
Farmers Home Administration, and
Homestead Staff Exemption Certificates
do not qualify for the credit.
The home to which the certificate
relates must be your main home and
also must be located in the jurisdiction
of the governmental unit that issued the
certificate.
If the interest on the mortgage was
paid to a related person, you cannot
claim the credit.

Refinanced Mortgage
You can refinance your mortgage
without losing this credit if your existing
MCC is reissued and the reissued
certificate meets all of the following
conditions.
● It must be issued to the holder(s) of the
existing certificate for the same property.
● It must entirely replace the existing
certificate. The holder cannot retain any
portion of the outstanding balance of the
existing certificate.

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If the certificate credit rates are
different in the year you refinanced, attach
a statement showing separate calculations
for lines 1, 2, and 3 for the applicable
parts of the year when the original MCC
and the reissued MCC were in effect.
Combine the amounts from both
calculations for line 3. Enter that total on
line 3 of the form and enter “see
attached” on the dotted line next to line 2.
For more details, see Regulations
section 1.25-3(p).

of home mortgage interest you would
otherwise deduct on Schedule A by the
amount on Form 8396, line 3, and report
the reduced amount on Schedule A. You
must do this even if part of the amount
on line 3 is carried forward to 2008.

Recapture of Credit

Part II—Mortgage Interest
Credit Carryforward to 2008

If you buy a home using an MCC and
sell it within 9 years, you may have to
recapture (repay) some of the credit. See
Pub. 523, Selling Your Home, and Form
8828, Recapture of Federal Mortgage
Subsidy.

Complete Form 6251, Alternative
Minimums Tax-Individuals, through line
31. Enter the amount from Form 6251,
line 31 on line 11.

Additional Information

See Pub. 530, Tax Information for
First-Time Homeowners, for more
details.

If you have any unused credit to carry
forward to 2008, keep a copy of this
form to figure your credit for 2008.

Specific Instructions

If you are subject to the
$2,000 credit limit because
your certificate credit rate is
CAUTION
more than 20%, no amount
over the $2,000 limit (or your prorated
share of the $2,000 if you must allocate
the credit) may be carried forward for
use in a later year.

Part I—Current Year
Mortgage Interest Credit
Line 1
Enter the interest you paid during the
year on the loan amount (certified
indebtedness amount) shown on your
MCC. In most cases, this will be the
amount in box 1 on Form 1098,
Mortgage Interest Statement, or on a
similar statement you received from your
mortgage holder. If the loan amount on
your MCC is less than your total
mortgage loan, you must allocate the
interest to determine the part that relates
to the loan covered by the MCC. See
Pub. 530 for an example of how to
allocate the interest.

Line 2

● The credit rate of the reissued
certificate cannot exceed the credit rate
of the existing certificate.

Line 3

For each tax year, you must determine
the amount of credit that you would
have been allowed using your original
MCC. To do this, multiply the interest
that was scheduled to be paid on your
original mortgage by the certificate rate
on your original MCC. The result may
limit your line 3 credit allowed when you
have a reissued MCC, even if your new
loan has a lower interest rate.

Line 11

If the amount on line 13 is less than the
amount on line 7, you may have an
unused credit to carry forward to the
next 3 tax years or until used, whichever
comes first. The current year credit is
used first and then the prior year credits,
beginning with the earliest prior year.

● The certified indebtedness on the
reissued certificate cannot exceed the
outstanding balance shown on the
existing certificate.

● The reissued certificate cannot result
in a larger amount on line 3 than would
otherwise have been allowable under the
existing certificate for any tax year.

2

The certificate credit rate cannot be less
than 10% or more than 50%.

If you refinanced, see Refinanced
Mortgage on this page.
If the certificate credit rate shown on
line 2 is more than 20%, multiply line 1
by line 2, but do not enter more than
$2,000 on line 3. If you and someone
else (other than your spouse if filing
jointly) held an interest in the home, the
$2,000 limit must be allocated to each
owner in proportion to the interest held.
See Dividing the Credit in Pub. 530 for an
example of how to make the allocation.
Reduction of home mortgage interest
deduction on Schedule A (Form 1040).
If you itemize your deductions on
Schedule A, you must reduce the amount
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