What precentage of mortgage interest is refunded in taxes<?

Question

So Far this year I have paid over fifteen thousand dollars in interest on my mortgage. Is there a certain percentage that is refunded when I do my taxes? Also, are closing costs refundable too?

Answer 1

Depends upon your marginal tax rate and filing status.

Only the amount that exceeds your standard deduction gives you any benefit. If you're married filing a joint return, your standard deduction is $10,700. For sake of argument let's say you paid $15,700 in interest. Your deduction would reduce your income by $5,000 more than the standard deduction. If your tax bracket is 25%, your benefit would be a reduction in taxes of $1,250. That would be about 8% of the total interest paid in your case.

Most closing costs must be added to your cost basis. They'll reduce your gain when you eventually sell. Prepaid interest (points) can be added to the mortgage interest and deducted in the year you close on a purchase mortgage. If your mortgage is a re-fi, you must amortize the points over the life of the loan.

Whether or not you get any refund depends upon your net tax liability and how much tax was withheld during the year.

Answer 2

It doesn't work that way, exactly. Here's how it works: You can itemize your deductions instead of taking the standard deduction on your taxes, and you can itemize your mortgage interest, your closing costs, and your property taxes. Those amounts are added together and deducted from your income to determine your taxable income. Trust me, you'll get a much bigger return if you itemize because the standard deduction for a married couple filing jointly is about $11,000.00 right now. You've already cleared $15,000.00 in interest, so you're probably looking at about $25,000,00 in itemized deductions by the time you throw in your closing costs and your property taxes. Doesn't mean your tax return will be twice as big because the taxes are done on a graduated scale, but you will get a lot more back this way.

Answer 3

Mortgage interest is not refunded. You have to complete a Schedule A and when you get your 1098 statement from your lender at the end of the year you put all of your mortgage interest on line 10 (Schedule A). More than likely you will be able to take the itemized deduction verses the standard deduction. You can not take both. You will be filing a long 1040 form as well since you will be using a Schedule A.

Answer 4

Not refunded. There is an amount of interest that is deductible and the percentage would depend upon your tax bracket and your income and mortgage interest paid. Closing costs can be amortized over a period of years and deductible. Additionally depending upon the state you live in, your real estate taxes paid could be deductible. However, unlike stocks and other investments, you cannot deduct the expenses of upkeep on your home, despite the fact that the real estate taxes increase as the county increases the value of your home or as there are referendums in your community. We call that a tax on unrealized capital gains. Over the years, if you calculate what you paid into your house in real estate taxes, mortgage interest, etc. and then deduct the amount of income taxes you saved, you'll probably find that you're in the hole rather than ahead as far as investments go.

If you want to be pretty exact about what the deduction might be, get a tax preparing program and do a pseudo-tax form to see the impact based upon your personal information. If you can figure what your taxes would have been in 2006 had you purchased a home and you have your 2006 tax return, you'll be able to figure the true percentage as it fits your income.

Answer 5

You report mortgage interest paid on Schedule A - Itemized Deductions, and if your total itemized deductions are higher than your standard deduction then you would itemize. As far as the percentage, there is no set percentage, it is basically that you get back at whatever tax bracket rate you are in. If you are in the 10% bracket you get 10% back, 15% you get 15% back, etc. Closing costs are not refundable, the only cost other than interest and real estate taxes that is deductible is points.

Answer 6

No, it's not exactly a percentage, although your tax bracket is part of the calculation. With that much interest, you'd itemize. To calculate the benefit to you from itemizing, including the interest along with whatever other itemized deductions you have, total up your itemized deductions, subtract $5350 if filing as single, $10,700 if filing a joint return (that's the standard deduction you'd get anyway if you didn't itemize), then multiply by your tax bracket.

Example: If your total of your itemized deductions is $21,000, you file a joint return, and your tax bracket is 15%, the savings to you would be (21,000 - 10,700) * .15, or $1545.

The only parts of closing costs that are deductible: interest, points and real estate taxes.

Answer 7

No. there is not any "refund" for loan interest paid. on a similar time as you are able to deduct loan interest paid and get some tax income from it you're able to be able to desire to have some taxable earnings to offset with the deduction interior the 1st place. in the adventure that your taxable earnings is already 0 your tax criminal duty is likewise 0 and there is not any extra advantageous benefit for any deductions which you will in any different case declare.

Answer 8

The net tax effect is usually much less than you think it will be. Buying a house isn't the huge tax windfall that people seem to expect. Unfortunately, we do not have enough info about your personal tax situation to give you an accurate answer.

Points and loan origination fees paid at closing are deductible but most of the other closing costs are not.