Federal Mortgage Interest Tax Credit

The Internal Revenue Service allows you to claim the federal mortgage interest tax credit if you participated in the mortgage credit certificate program. North Carolina does not allow a mortgage interest tax credit. If you itemized your deductions and claimed the mortgage interest tax credit on your federal return because you participated in the mortgage credit certificate (MCC) program, you may deduct the amount shown on line 3 of Federal Form 8396.

If you qualify for this deduction enter the amount from line 3 of Federal Form 8396 on line 51 of your North Carolina Form D-400. This amount will become part of the amount on line 9 of page 1 of your Form D-400.

Remember, you must claim North Carolina itemized deductions and claim the federal mortgage interest tax credit on your federal return to claim this deduction on your North Carolina return.

For tax years beginning on or after January 1, 2014, you may no longer claim a deduction for the federal mortgage interest tax credit claimed on your federal return. However, if you choose to claim North Carolina itemized deductions, you may be able to claim the total of all qualified mortgage interest paid during the tax year if you choose to claim North Carolina itemized deductions.