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Irs Tax Help Tax Time Tips For Mortgage Holders

Irs Tax Help Tax Time Tips For Mortgage Holders

By Billy Edward

It is 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 advantages of holding a mortgage on your house is the ability to claim particular deductions that can assist you in offsetting a few of your tax burden. As you prepare to file your annual taxes, let's look at a couple of areas where you can make the most of tax deductions and keep a bit 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 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 doesn't involve other properties and houses you might own for rental purposes, etc. If you paid off your mortgage this year and were slapped with a pre-payment penalty, you could also make use of Schedule A to take a deduction on those feesas well.

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 via an escrow account, you can come across the deductible amount listed there - if not, 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 plus your mortgage amount puts you over the real value of your home in total amount owed, there are limitations to what you may deduct.

Points of all types 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 added bonus comes if you refinanced in a prior year and then refinanced against during the past year and wound up paying off the first refinance. Any points you hadn't deducted from that first loan now turn out to be eligible for write off in their entirety.

If you took out your mortgage in the previous 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 the very least equal to the points you were charged. This one can be tricky, so be sure to consult your tax prepared for much more information.

This tax season, make sure you are making the most of every deduction you can; a part of possessing a home and having a mortgage means that you get to reap a few of the benefits of that ownership via the tax system. Do not allow the IRS keep the money that you can use to help pay off that mortgage faster!


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