Let us face it; owning a home especially in the USA can be considered a huge advantage especially when it comes to tax time. This may not come as a surprise considering you will benefit from the mortgage interest deduction on the interest expenses that are charged on your loan. For those who might have no clue, the Mortgage interest tax deduction is applied for mortgage interest paid on the first $1 million on your mortgage debt. In order to claim the mortgage interest deduction, you will first have to itemize on your tax return.
With the mortgage interest deduction, you are set to reduce your taxable income by the amount of money you had spent in mortgage interest during the year. No wonder you are always advised to keep your records when having a mortgage since the interest you are now paying on your home could help you in cutting the tax bill. One thing you ought to keep in mind is that the deduction limit on your mortgage is no longer $1 million but $750,000. However, the changes only apply if you purchased a home after December 15th 2017.
So, what qualifies as mortgage interest? Well, you can easily access this information on the IRS publication 936. To give you a tip of the iceberg, the home has to be collateral for the loan or must have sleeping, cooking and toilet facilities in order to count. You can also deduct your home mortgage interest when you receive a nontaxable housing allowance through the ministry or from the military. Unfortunately, title insurance, settlements costs and homeowners insurance is not deductible.
One thing you ought to remember is that you might end up having a negative impact on your mortgage deduction on your taxes if at all you happen to have a higher income in local and State taxes. When it comes to claiming a mortgage interest tax deduction, it is important to note that the online tax filing is developed with at-home filers in mind. You’ll thus have an easy time when claim the mortgage interest tax deduction.