Does it really make a difference in taxes by squeezing in one last mortgage payment?

Question

I am thinking about calling in my January mortgage payment tomorrow to get the interest credit on my 06 taxes. I have currently paid approximately 8,600+ in interest and if I make the payment tomorrow, $900-$1000 will go to interest. Please help.

Answer 1

Make sure the additional payment is incorporated on yur INt-1098.
If not the argument could be made that the credit is not available if the Mortgage payment was not yet due, regardless of date of payment. Call your mrtgage company to find out... Of course you can always report your additional payment under payments without 1098 on ur schedule A. Are you anticipating a bad income yr in 2007-- ? You may need that payment for next yr if your income is higher... Call your tax man.

Answer 2

If you have had the loan all year making the extra payment wont really benefit you tax wise. You will only raise your return by a fraction of the payment amount. You can deduct interest paid every year and most closing costs the year you closed the loan. Ask your tax preparer about adding another exemption to your W-9 form instead. That way you can still get a return at years end but have less withheld every payday. Then take 1/2 of that savings and make a 2nd payment every month toward principal only out of the money you aren't lending the IRS anymore. Use the other 1/2 for whatever you want.

Answer 3

Not really. It'll save you probably about $300 this year, but you'll have to continue making that extra payment every year, just to have 12 payments in each calendar year.