Mortgage Interest Deductions 101 For Home Owners

Dated: September 15 2021

Views: 20

Mortgage Interest Deductions 101
Purchasing a home comes with many tangible and intangible benefits. One that is commonly overlooked until the start of the year rolls around is the deductions you get on your taxes. As a homeowner, you’re likely able to deduct most, if not all, of your home mortgage interest resulting in a lower tax bill.
Interest paid on a loan that was used to buy, build, or complete substantial renovations on your primary or secondary home falls into the deductible mortgage interest bucket. The property can be a house, apartment, condominium, mobile home, house trailer, or co-op. The amount of interest you can deduct does cap out at $750,000, although most homeowners do not reach that threshold.
At the end of each tax year, your lender will provide you with a mortgage interest statement, or Form 1098, that states the total amount of interest paid for that year. You are responsible for reporting an accurate total of interest paid when you file. This requires you to itemize your taxes. If you have purchased a home with one or more people, each homeowner can deduct the amount of interest they personally pay.
 There are a few other payments that may count as mortgage interest and could be added to your deductible amount. These include mortgage points, late payment charges, prepayment penalties, interest on a home equity loan, and certain mortgage insurance premiums.
By deducting mortgage interest from your taxes, you are reducing your taxable income. As a result, you have less tax liability and reduce the amount of taxes you owe which is more money in your pocket!

*For questions about tax deductions, please consult with your certified accountant.

Want more information on the local market?

Blog author image

Heaven Hagos

As real estate agent over 10 years in the business, I bring a wealth of knowledge and expertise about buying and selling real estate. It's not the same everywhere, so you need someone you can trust fo....

Latest Blog Posts

Mortgage Interest Deductions 101 For Home Owners

Mortgage Interest Deductions 101Purchasing a home comes with many tangible and intangible benefits. One that is commonly overlooked until the start of the year rolls around is the deductions you get

Read More

ELIMINATING HOME REFINANCING MYTHS

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your

Read More

5 NEGOTIATING TACTICS THAT KILL SALE TRANSACTION

Negotiation is a subtle art in real estate, but skilled negotiators can usually find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a

Read More