It's tax time, don't forget your Mortgage Tax Deduction!!

By
Real Estate Agent with Keller Williams Realty
Well, here we are again-Income Tax time...Just a reminder that one of the advantages of being a home owner is the opportunity to deduct your Mortgage Interest on your income taxes. While I am not a tax advisor, here are a few helpful tips to consider. In order to use this deduction, you must: •You must file Form 1040 and itemize deductions on Schedule A. •You must be legally liable for the loan - you cannot deduct interest if you make a payment on someone else's loan. •You must make the payment on a qualified home. Of course, because the deductions are regulated by the government, the rules are never quite as simple as they seem at first glance. There are two types of debt that generate tax-deductible interest. The first is debt that was taken out in order to buy, build or improve your home. This type of debt is known as "acquisition debt". The second type is debt that was taken out for other purposes and is known as "equity debt" because it draws on the equity of your property. Between the two, you can take out $1.1 million in debt and deduct the full amount of mortgage interest, provided that all mortgages fit into certain criteria (based on where you are filing as single or jointly basicly). Now, from here you need to consult with your tax advisor as it relates to what constitutes a "home", vs. a "second home" in order to deduct the interest. Don't forget about your rental properties, that interest is also deductable, however you must use a Schedule E. Again, consult your tax advisor, this is intended as food for thought and to point out another advantage of home ownership!

Comments (3)

Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Good reminder for home owners. Some first time buyers may forget to take the deduction.

Jan 05, 2011 11:52 PM
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

Thats why I have someone help me with taxes...lots of deductions to remember.

Jan 05, 2011 11:58 PM
Tom Robinson
Keller Williams Realty Kingstowne/Alexandria, VA Office - Fairfax, VA
Experienced Real Estate, Professional Serving No. VA and DC

I am surprised in this MID debate to learn that many of those who qualify for this deduction do not take it.

Jan 05, 2011 11:59 PM