2006-11-13 09:56:37 · 10 answers · asked by mkaustin 1 in Business & Finance ➔ Personal Finance
If you haven't had a mortgage before, you've probably been taking the standard deduction on your income tax.
When you have a mortgage, you very likely have more deductible expenses than the standard deduction. Deductible expenses include mortgage interest, real estate taxes, state and local income taxes, and a number of other expenses. Check out irs.gov, and download instructions for 1040 schedule A at http://www.irs.gov/pub/irs-pdf/i1040.pdf - start on page 83 for instructions on itemized deductions.
If your allowable itemized deductions total more than your standard deduction, then you would itemize, and save taxes on however much the itemized amount exceeds the standard deduction by.
Last year the standard deduction for a married couple was $10,000 - it will be a little higher this year. Last year if you were married, had itemized deductions that totalled $12,000, and were in the 15% bracket, you'd have saved $300 on your taxes by being able to itemize. Any savings that you'll get will depend on your filing status, the total of your itemized deductions, and your tax bracket.
2006-11-13 13:35:57 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
Per IRS Publication 936
Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan.
You can deduct home mortgage interest only if you meet all the following conditions.
You must file Form 1040 and itemize deductions on Schedule A (Form 1040).
You must be legally liable for the loan. You cannot deduct payments you make for someone else if you are not legally liable to make them. Both you and the lender must intend that the loan be repaid. In addition, there must be a true debtor-creditor relationship between you and the lender.
The mortgage must be a secured debt on a qualified home. “Secured debt” and “qualified home”
2006-11-13 10:02:23 · answer #2 · answered by Damon A 2 · 0⤊ 0⤋
As soon as you buy a home, you get some tax advantages. You can deduct home mortgage interest, real-estate taxes, and loan points as long as you maintain good records and file Schedule A to claim your home-related deductions.
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For most people, the best home deduction is for mortgage interest. How do you figure out how much you've paid in mortgage interest during the year?
You should receive a statement from your lender by the end of January listing the mortgage interest you paid during the year. This statement will be labeled Form 1098. It may be attached to, or part of, your monthly mortgage statement, so be sure that you study your January statement carefully to identify any portion labeled as Form 1098. The amount shown as interest paid on Form 1098 is the amount you deduct on your tax return.
Often a fraction of home mortgage interest appears on your settlement statement in the year of your purchase. This interest should be included in the Form 1098 statement provided by your lender.
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Where Do I Take This Deduction?
Fill out Schedule A, Itemized Deductions, to take a deduction for your mortgage interest.
* If you received Form 1098 reporting the amount of mortgage interest you paid for the year, record your interest deduction on Line 10.
* If you didn't receive Form 1098, use Line 11 instead.
If your home loan is with a private party (for example, with the person from whom you bought your home), you may not receive a statement of interest paid even though your mortgage holder should have completed the form for you. You may still deduct your interest as long as your loan is secured by your home. Report your lender's name, address, and social security number on the lines next to Line 11. (You should have been given this information during the closing of your home purchase).
2006-11-13 10:01:35 · answer #3 · answered by Sky Li 3 · 0⤊ 0⤋
he interest you pay on a martgagfe is tax deductible. your mortgage company will send you a statement at the end of the year telling you how much interest you have paid. When you do your taxes the next year you can claim it.
2006-11-13 09:58:19 · answer #4 · answered by bbq 6 · 0⤊ 0⤋
The interest you pay on the mortgage payments are income tax deductible.
2006-11-13 09:58:13 · answer #5 · answered by SKYDOGSLIM 6 · 0⤊ 0⤋
They probably meanon your Income Taxes. If you itemize, ask your CPA or if you use H&R blockonline they will ask if you want to compare itemizing and the regular deduction. I think the interest has to be over a certain amount
2006-11-13 10:00:12 · answer #6 · answered by Julie 3 · 0⤊ 0⤋
At the end of the year, your mortgage company will send you a statement showing exactly how much interest you paid to them during the year. You take that statement to whom ever does your taxes, and he will apply it your income tax. You may be in for a nice surprise in shape of a refund check!
2006-11-13 10:00:21 · answer #7 · answered by Sam 3 · 1⤊ 0⤋
They are correct. Interest from Morgtage Payments can be deducted.
2006-11-13 10:06:53 · answer #8 · answered by Anonymous · 0⤊ 0⤋
don't get too excited - its not a dollar for dollar credit, but you will get a deduction to claim at the end of the year.
2006-11-13 12:29:24 · answer #9 · answered by Paula M 5 · 0⤊ 0⤋
on your income taxes. You can get a break on your tax returns and get back (or take off) the amount of interest you paid in that year. ask HR Block.
2006-11-13 09:58:01 · answer #10 · answered by Amanda SSS 3 · 0⤊ 1⤋