If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. The amount of credit you can claim on the new loan may change. Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan.
If you get a new (reissued) MCC and the amount of your new mortgage is ... THEN the interest you claim on Form 8396, line 1, is* ... smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. certified indebtedness amount on your new MCC original amount of your mortgage
An issuer may reissue an MCC after you refinance your mortgage. If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC.
Year of refinancing. In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1.
If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. It must show a separate calculation for the part of the year when the new MCC was in effect. Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2.
Pub 530 Instructions