Interest on mortgage tax deductible in CA?

Question

I make 60K a year, and I pay 25K in interest on my mortgage every year. Does that mean that my taxable income is 35K? I file as a single. How much can I expect to get back this year? Last year I got 2K in returns, but that's before I bought a home. Thanks!

Answer 1

Given the information you provided.

Yes, your CA taxable income would be $35k.

BUT, don't forget that property taxes, states taxes paid or withheld on your paycheck (SIT & SDI), auto registration (VLF fee only), donations are all also deductions you can take thus your taxable income will definetly be lower than $35k.

For the info you gave, $35k would result in a tax of $1,236, less the CA exemption of $91, and you would have a net tax of $1,145. Then just subtract your withholdings from that.

Answer 2

In addition to subtracting the 25K home interest from your income, you also get to subtract an exemption for yourself ($3300 for 2006), and also any other itemized deductions that you have (I'd bet that at least you have real estate taxes since you own a house, and state income taxes - you might have other itemized deductions also). So your taxable income would likely be a lot less than 35K.

As to what you'll get back, you'll have to calculate your taxes, then subtract that from what you paid in. If you earned and paid in about the same this year as last year, and nothing else changed much, then you'll likely have a big refund. If so, you should adjust your withholding - otherwise you're giving Uncle Sam an interest-free loan, which doesn't make a lot of sense.

Answer 3

Yes, the interest you paid on your mortgage is deductible for tax purposes, as well as the property tax you paid, and the state income tax you paid as well (for federal tax purposes). You will need to itemize your deductions.

When purchasing a home, you can adjust your withholding so you're not giving the government an interest-free loan. On the Form W-4, there is a worksheet where you can figure out your withholding exemptions based on an estimate of what your itemized deductions will be.

Answer 4

Mortgage interest is taken into consideration on your itemized deductions, schedule A on your federal form 1040. The state of CA will allow those itemized deductions minus your state tax refund. If this is the 1st year that you've owned a home the FTB will not issue you a 1099-G for your state tax refund but look for it next year. If this is confusing or you have any more questions the FTB website is www.ftb.ca.gov

Answer 5

Your taxable income is what you make (gross), less any deductions that are pre tax or tax free. Go to turbotax.com and start a return (dont submit it) it should give you an estimate of what you can anticipate. Also make sure you itemize your deductions. Include any charitable contributions, DSL, Dry cleaning, mileage etc if any apply to you. Also if you are in the computer industry or in school you can deduct a new pc purchased within the year.

Answer 6

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Answer 7

I am not aware of the laws in CA, however you can generally only write-off mortgage tax if you are renting out the property, and then you would have to declare the rental income you earn from it. The benefit is that you can then write-off any expenses associated with the residence as well.