page contents
USA Real Estate Blog

What You Should Know – Jacques Poujade – Medium

0 0

The tax filing deadline is just around the corner. With the sweeping changes due to tax reforms instituted by the U.S. Congress, you may be confused about which mortgage and tax write offs you may still be able to include on your 2018 tax return. Here is what you need to know when preparing this year’s return.

Photo by rawpixel on Unsplash

Mortgage Interest

Although most homeowners don’t look forward to paying their mortgage every month, the interest that you incur during the year is still eligible for deduction on your 2018 income taxes. Your loan, however, must meet certain requirements for it to be eligible for deduction. To be eligible, the loan must be secured by your home and must be used to either buy or improve your resident or another home that you have for personal use.

The amount of interest that you can deduct if you itemize your return has changed for 2018. Taxpayers deduct the interest from the principal of loans up to $750,000, however, if the loan closed prior to December 16, 2017, the interest from principal up to $1 million may be deducted. Your mortgage lender will send you Form 1098 indicating how much interest you paid during the tax year, forming the basis for a deduction.

Home Equity Loans

Your home equity debt will also qualify for a tax deduction. Limits for these loans, however, are much lower as you can only deduct the interest on the first $100,000 of your home equity loan. If you refinance or use your home equity for home improvements, the loan is treated as a mortgage debt and subject to those write off requirement.

Mortgage Points

Those pesky points that you pay in order to get your mortgage rate lower are also eligible for mortgage and tax write offs. The Internal Revenue Service considers these charges to be pre-paid interest. Generally, you can deduct the money you pay for points for the tax year in which you obtained your home loan, however, in some instances you can deduct them over the life of the loan. Consult with your tax adviser to see which situation is applicable to you.

Mortgage Insurance

If you can’t have a down payment amounting to 20% of your loan, you are usually subject to mortgage insurance. This tax deduction is no longer available, but it could be renewed in the future. In previous years, you were eligible for this deduction if your mortgage was taken out prior to 2007 and your income fell under specified limits.

Property Taxes

You can also deduct your property taxes on your 2018 income tax return. Note, though, that the rules have changed significantly. Prior to 2018, taxpayers were able to deduct the entire amount of their property taxes. That amount is now capped at $10,000.

Disclosure: I am not a tax professional and these are just my general tips. If you have specific questions please contact your tax professional.

قالب وردپرس

You might also like

Leave A Reply

Your email address will not be published.

Pin It on Pinterest

Share This

Share this post with your friends!