How does income taxes and home loan intrest work?

Question

we bought a home 3 months ago and have pulled out 1099 off from the loan site, We have paid in around 3k for the year 2006. How will that effect my taxes. We usually only get about 200-300. dollars back anyway.

Answer 1

If you itemize deductions then you can claim the interest plus taxes. If the sum of your itemized deductions (you may have others besides your home) is greater than the standard deduction, then your refund will be increased by the difference between the two multiplied by the percentage of your tax bracket.

Answer 2

you file the long form and the interest will reduce your total taxable income therefor giving you a much higher return. Also do not forget your closing cost from your Settlement statement. Much of that can be expended and deducted over the term of the note. Take it to a tax preparer that will look at your HUD Settlement statement as well. It is the form that shows where ALL the money went and your down payment as well as insurances and taxes etc. Many people never take this to their tax person as they do not know that they should. Some tax preparers may not know either especially if the are there for the 3 months of filing such as an Block office as they just get crash courses in taxes and just plainly may not know.
I am a mortgage banker in Tennessee

Answer 3

Good News: Home loan interest is tax deductable

Bad News: You probably closed too late in the year to have much effect on your 2006 taxes. Assuming you are married, your standard deduction will probably still be higher than your itemized dedcutions for 2006. Next years taxes should show a bid difference though......

Answer 4

The amount of interest that you paid is deductible from your income for the purpose of taxes. That means you will save the taxes on the amount of interest you have paid. That depends on your tax bracket, but for example, if your tax rate is 15%, your savings will be $450.