It's that time of year again when numbers like 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 could assist you in offsetting a few 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 bit more green in your pocket this tax season.
The most obvious deduction that many tax filers benefit from is the interest paid on the mortgage for their primary residence. For people with a mortgage balance of less than $1 million dollars (and hopefully that is most of us!) you can complete Schedule A, also referred to 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 (in which 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 could also use Schedule A to take a deduction on those feesalso.
Taxes paid to local governments, referred to 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 come across the deductible amount listed there - else, check your assessment notice sent to you by your local taxing authority.
If you made the decision 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 in addition to your mortgage amount puts you over the real value of your home in total amount owed, there are limitations to what you might deduct.
Points of all kinds are generally tax deductible also. If you refinanced during 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 implies that if you have a 20 year mortgage, you get to deduct 1/20 of the points every year. An additional bonus occurs if you refinanced in a prior year and then refinanced against in the past year and wound 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 certain to seek advice from your tax prepared for much more info.
This tax season, make certain you are taking advantage of each deduction you can; a part of possessing a home and having a mortgage implies that you get to reap a few of the benefits of that ownership through the tax system. Don't let the IRS keep the money that you can make use of to help pay off that mortgage faster!
More Information:
If you want more information on
Tax Help, don't read just rehashed articles online to avoid getting ripped off. Go here:
IRS Tax Help 
Categories
