Can we claim the interest we pay on our mortgage on this years tax return?

Question

I was told that we could claim the intrest we pay to our mortgage company & that we'd get most or maybe even all of it back on our 2007 return. My husband & I are young & just bought our house last August. We have a very high intrest rate & by the time we pay Decembers mortgage payment we will have paid nearly $9,000 in intrest (is that alot?) I'm not sure what info anyone would need to be able to tell me if we'd get back any of the intrest paid so here's some of the info I know about last years return...

I think we do long form ~ We have 1 child together & he has 3 from another relationship, & I have a son from another relationship as well ~ We make around $40,000 a year.

I would like to add that YES our income is only about 40,000 a year because I stopped working this summer to go back to collage, in order to get a better paying job & we are living offmy husbands sole income & our savings (I created by working 2 jobs for almost 2 years)


Boy, katie for someone who is here to help you sure are rude or maybe you are just here to be rude to people who are asking for help? BTW ~ wouldn't one think that if I have a mortgage that I'm not a homeless begger.

Answer 1

Yes and no - yes you will be able to deduct your mortgage interest, but no that does NOT mean that you'll get most or all of it back although it might decrease your taxes some. Many people think that, and many realtors encourage people to think that, but it just isn't true.

As a married couple filing a joint return, you'd get a standard deduction of $10,700. If you itemize instead (to deduct items like your mortgage interest) you would take the itemized total instead of the standard. You probably also have real estate taxes, maybe charitable contributions, depending on where you live probably state and maybe local income taxes - these would all be itemized deductions.

Then there's the question of how many of the children you can claim on your tax return. I'm going to assume that you can claim your child together, and yours by an earlier relationship, but not his other three - and that the two you can claim are both under age 17. If these assumptions aren't right, then the rest of my calculation will be off also.

OK, with those assumptions, your income tax on $40,000 if you did NOT itemize would be around $1600, and by the time you took the $2000 in child tax credits, you would have no tax liability. Since itemizing can reduce your taxes but not take them below zero, you'd get no benefit from itemizing since your tax is already zero. So if you can claim two or more children who are under 17, then you'd get no tax benefit from the mortgage interest.

If your child together is under 17 but your other child isn't, then if you took the standard deduction you'd have tax liability of around $600. If your total itemized deductions including the interest totalled around $14,000 (they might be more or less than that but to calculate, I have to make a guess) your tax liability itemizing would be around $240, so you'd save about $360 due to the interest you paid and your other itemized deductions. Even if your itemized deductions totalled over $26,000 so they totally wiped out any taxable income, the most that would save you is about $600.

Answer 2

you would deduct the interest paid in 2007 on your 2007 tax return (Schedule A - Itemized Deductions) (to be filed in early 2008). You can also deduct real estate taxes, and state and local income taxes. Last years interest paid is not relevant. You should go to a tax preparer next year. In the meantime, to get more take home pay - if all 5 kids living with you or at least 5 that you are allowed to claim on your tax return, have your husband change his W-4 exemptions to married - 7 (or married and (2 + however many kids you can claim)

Answer 3

OK - do not take what you hear word for word. The total is allowed to be deducted on your Schedule A, and reduces your taxable income. For example, you say you make around 40K. Well then, once you take away the 9K, your net taxable income becomes 31K. It's a bit more complicated, because you will also be able to deduct property taxes, state and local taxes, charity, etc. on the Sch A. Also, be sure there is an understanding about who can claim the children - that's another source of contention between people.

Answer 4

Yes, you may claim the mortgage interest you have paid from August to December 2006 on an amended return on your 2006 taxes. Then all of 2007 interest on your '07 taxes.

Hopefully, if we can get the FairTax Act passed, we can keep our before tax dollars and not have to make a claim on after tax dollars... see Frequently Asked Questions about the FairTax http://www.fairtax.org/fairtax/faqs.htm

Answer 5

Yes , mortgage interest can be listed when you itemize .
BUT , you do Not get it all back , it just lowers your income bracket .
$9000 in % might save you some if you have lots of other deductions .
The standard exemption is $10,300 for a couple so if you can get write offs to exceed that . . .

If you bought the house last Aug ( 1 year ago ) you should have already filed taxes and evaluated your situation in for 2006 .

If you did not , you are overdue to read the instruction book for the 1040 .
Mortgage % and property taxes are listed on Schedule A .

http://www.irs.gov/ You can read it on line .

Read the 1040 booklet , unless you are homeless beggars , you need to know what the IRS rules are .

Good Luck !

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Answer 6

yes, mortgage interest and property taxes are deductible. but that doesn't automatically mean you will get anything back. whether you get a refund or not depends on how much tax you paid during the year. if you didn't pay enough tax for the amount of income you had, you will owe. you only get a refund if you overpaid your tax during the year. the mortgage interest and property tax deduction will lower the amount of your taxable income and give you a better chance of having overpaid. but it might not. when you fill out your return you will see if your getting anything back or not.

Answer 7

It doesn't really work like that. It does depend on your interest rate, but also has to deal with Escrow etc. It is very complicated. There is also a certain amount that you have to qualify for to even be able to claim it. Don't get your hopes up. It has never helped us before.

WOW! A quarter of your combined yearly income of $40,000 goes to interest on the house??? and you have 5 kids combined?

Answer 8

The answer is yes, you can claim the interest on your taxes. Whether or not you will get it back ( you will get money back based on your info but its not the interest that is repaid its the whole return itself) is based on each individuals tax return but chances are you will be geing a big refund from the information you have submitted. MAke sure you get a certified accountant to help you prepare your income taxes as they are trained in deductions and this surely does qualify!

Answer 9

You can claim mortgage interest, if you itemize, and real estate taxes. You shoulldl get a form in the mail from your mortgage company with this information on it. You may or may not get everything back.

Answer 10

Yes you can claim mortgage payment on tax return also property tax. You can report interest as expense. You can contact the person who does your taxes for you for more info