Can I deduct mortgage interest payments in 2007 off on my taxes? I know that PMI is now deductible and that a committee recommended eliminating the interest deduction, but have been unable to find an answer on the web, particularly the IRS website (which can be confusing).
My accountant sister says the government did away with all mortgage interest deductions, but I can't find evidence to support this on the web. Please link to appropriate documentation in your answer if possible.
Thanks for your help. I recently sold my home and am in a rental. I am thinking that I might need to buy soon since I would come out ahead by owning, particularly if the interest is deductible. If it is not, I probably will rent longer, pay off what few bills I have and save up for a better down payment.
2006-12-31 14:33:14 · 4 answers · asked by cottey girl 4 in Business & Finance ➔ Taxes ➔ United States
Mortgage interest on your home is generally tax deductible on Schedule A. There are a few exceptions for very large mortgages (over 1 million) or lines of credit not used to improve the house (over 100K).
PMI will be deductible in 2007 but is not deductible in 2006.
2006-12-31 14:37:53 · answer #1 · answered by ninasgramma 7 · 2⤊ 0⤋
As of right now, yes, you can deduct mortgage interest.
Though I think your idea of renting a little longer, paying your few bills and saving up for a bigger down payment is a wonderful idea. Right now, the housing market is going nuts. Houses are way overpriced. I am going through the exact same thing. I sold my home in June 2006, moved 100 miles away, I am also renting. My rent payment is less than half of my mortgage, I don't have maintenance and upkeep, no real estate taxes to pay. Rental insurance is cheap!!! I am able to pay my bills with money left over every week, and save money regularly. I figured I would rent until I found something I liked, only to find out, I like renting!!! I had lived in my home so long, I ended up taking the standard deduction the past two years because my mortgage interest was too low. The equity in my home was great, by the way.
I did not want to refinance it so that I could claim a mortgage interest because you are only going to get a percentage of it anyway. Not worth the time or trouble or cost!!
2007-01-01 04:13:21 · answer #2 · answered by sylvrrain 2 · 1⤊ 0⤋
If you're talking about the 2006 return that you'll file in 2007, then yes you definitely can - see Schedule A form at http://www.irs.gov/pub/irs-pdf/f1040sab.pdf
While the rules for 2007 taxes (filed in 2008) haven't been finalized and won't be until late 2007, it's most unlikely that the mortgage interest deduction would be eliminated.
2006-12-31 14:45:21 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
The proposal to do away with the mortgage interest and property tax deduction was made by a panel as a recommendation to pay for the cost of eliminating the alternative minimum tax. While it was the panel's recommendation, it does not become tax law unless someone in Congress introduces a bill, the bill is passed by Congress, and signed into law by the President. With such a large part of the US population relying heavily on the mortgage interest deduction, any politician who would put their name on such a bill, and any politician who would go on record as voting for such a bill, can kiss their chances of ever getting re-elected goodbye. It is unlikely that such a bill would ever be passed into law.
When the report of the panel recommendation was reported in the news, I had did a with and without calculation of how it would affect me, and I would see my federal tax bill go up by around $10,000 a year.
2006-12-31 15:38:56 · answer #4 · answered by jseah114 6 · 1⤊ 0⤋