Tax Time Tips For Mortgage Holders

Tax Time Tips For Mortgage Holders



Tax Time Tips for Mortgage Holders
It's that time of​ year again when numbers such as​ 1040,​ W-2 and INT-1099 become all too familiar to​ millions of​ people .​
One of​ the​ benefits of​ holding a​ mortgage on​ your house is​ the​ ability to​ claim certain deductions that can assist you​ in​ offsetting some of​ your tax burden .​
as​ you​ prepare to​ file your yearly taxes let's look at​ a​ few areas where you​ can take advantage of​ tax deductions and keep a​ little more green in​ your pocket this tax season.
The most obvious deduction that many tax filers take advantage of​ is​ the​ interest paid on​ the​ mortgage for their primary residence .​
For those of​ us with a​ mortgage balance of​ less than $1 million dollars (and hopefully that is​ the​ majority of​ us!) you​ can fill out Schedule A,​ also known as​ itemized deductions,​ and claim all the​ interest paid in​ the​ previous year on​ your mortgage .​
Keep in​ mind this is​ for your primary residence (where you​ live) only and does not include other properties and houses you​ may own for rental purposes,​ etc .​
If you​ paid off your mortgage this year and were slapped with a​ pre-payment penalty you​ can also use Schedule a​ to​ take a​ deduction on​ those fees as​ well.
Taxes paid to​ local governments,​ known as​ real estate or​ property taxes,​ are also tax deductible .​
If your mortgage company pays your taxes for you​ through an​ escrow account you​ can find the​ deductible amount listed there - else check your assessment notice sent to​ you​ by your local taxing authority.
If you​ decided to​ spruce up your home and took out a​ home equity loan you​ may also be eligible to​ take a​ deduction for the​ interest of​ the​ home equity loan .​
One thing to​ keep in​ mind though is​ if​ the​ home equity loan plus your mortgage amount puts you​ over the​ real value of​ your home in​ total amount owed there are limits to​ what you​ may deduct.
Points of​ all types are usually tax deductible as​ well .​
If you​ refinanced in​ the​ past year any points you​ paid to​ buy down the​ mortgage rate can be written off proportionately over the​ life of​ the​ loan .​
This means that if​ you​ have a​ 20 year mortgage,​ you​ get to​ deduct 1/20th of​ the​ points each year .​
An added bonus comes if​ you​ refinanced in​ a​ prior year and then refinanced against in​ the​ past year and ended up paying off the​ first refinance .​
Any points you​ had not deducted from that first loan now become eligible for write off in​ their entirety.
If you​ took out your mortgage in​ the​ past year,​ any points that you​ paid on​ the​ purchase are fully deductible if​ the​ mortgage was for your primary residence and you​ paid an​ amount down at​ least equal to​ the​ points you​ were charged .​
This one can be tricky,​ so be sure to​ consult your tax prepared for more information.
This tax season make sure you​ are taking advantage of​ every deduction you​ can; part of​ owning a​ home and having a​ mortgage means that you​ get to​ reap some of​ the​ benefits of​ that ownership through the​ tax system .​
Don't let the​ IRS keep the​ money that you​ can use to​ help pay off that mortgage faster!




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