Guest post by Kevin Craig
Is this how you feel when you think about tackling your taxes?
Deducting home mortgage loan interest rates – Saving on your taxes
Getting tax breaks on your home mortgage loan is one of the biggest benefits of home ownership but you need to know how it is possible to deduct the interest rates from your income so as to qualify for the tax breaks. Just as you need to use a loan mortgage calculator before taking out a mortgage loan amount, similarly, you also need to know the amount that you can save from your taxes by going for mortgage rate deduction. The mortgage interest rate that you pay is reported on the Form 1040, Schedule A along with all the other itemized deductions such as medical expenses, charitable contributions and other medical expenses. If you’re a taxpayer who is also paying mortgage interest rate, you should ensure that you fill out Schedule A to check if the itemized deductions are more than the standard deductions and if it is so, then probably the taxpayers will tend to save more money by itemizing.
What are the documents that you may need?
You have to get yourself a Form 1098 Mortgage Interest Statement from your mortgage lender and if you’ve bought or sold off the home, you need a HUD-1 Settlement Statement in order to go through this process.
What are the steps to deduct the home loan interest rate from the taxes?
While you can deduct the interest rates on the mortgage loans from your income, you can also deduct it from the second mortgage loan. Here are the steps that you can take.
- Adding your expenses: The first step that you need to take is to add up all the expenses that you can itemize as deductions in order to make sure that the total is always more than your standard deductions. Usually the main itemized deductions are home equity loan interest rates, the mortgage interest rates, state taxes, and the charitable contributions. If you see that the total itemized deduction is less than the standard deduction, it is better not to deduct the home mortgage interest rate.
- Get a Schedule A form and fill out: Get yourself a Schedule A form to fill out all the itemized deductions and remember that the third section of Schedule A is for all the interest rate deductions. Fill out the form and write the name of the company to whom you paid the interest rate, mentioning the entire amount that you paid during that tax year.
- Mention the name of anyone else whom you paid the rate: While you’re filling out Schedule A, you also have to mention anyone else’s name that you’ve paid the interest rate on the mortgage loan during the same tax year.
- Mention the total points that you paid: You also have to mention the name of the mortgage lending institution to which you’ve paid points and the total amount that you paid as points. Remember that the points on the second home and refinance loans need to be deducted over the life of the loan and not at once.
- Ask Your Mortgage Broker to Provide Your Final Certified HUD 1: This is a closing document when you closed your home loan. All you will need to do is give this document to your CPA and they should be able to give you all the proper deductions if you bought or refinanced a loan in the previous tax year.
Once you continue with the Schedule-A form and enter the right information in the right place, you can complete this process of deducting the mortgage interest rate from the taxes. If you would like to learn more about how you can benefit on your taxes from mortgage interest deductions you can contact us here today.
As you can see we get Jumbo Loans DONE when other lenders can’t do it. We mainly do this in cities across the California SF Bay Area like, Orinda, Lafayette, Pleasant Hill, Alamo, Blackhawk, San Ramon, Walnut Creek, San Francisco and Oakland CA.