Mortgage - Home Mortgage

Credit
Home
Interest
Mortgage Rate
Refinance
Home Mortgage Interest Deductions

The interest that you pay on your home mortgage can be used as an income tax deduction in the United States. Mortgage interest is an itemized deduction which means it will have to be listed on your income tax return.

An income tax deduction reduces the amount of income tax you have to pay. This can reduce your income tax payment or increase your income tax refund if you qualify for one.

What Interest You Can Deduct

The only mortgage interest you can deduct on your taxes is that on the home you live in. If you make a mortgage payment for anybody else you will not be able to deduct the interest on that mortgage payment from your taxes.

This means it is best to give another person the money to so they can make the mortgage payments in their own name. That way the person will be able to claim the mortgage interest deduction on their tax return.

It is also possible to deduct mortgage interest on rental property because it is a business expense. Mortgage interest on a home use for business purposes can also be deducted.

How to Get the Mortgage Interest Deduction

Most people will report mortgage interest on line 10 of schedule which is an additional document you’ll add to your tax return. The amount recorded here will be reported on line 40 of the 1040 or tax return for most people.

Your mortgage holder should send you a document called a Form 1098 or Mortgage interest statement. All you will have to do is put the amount of interest listed on this document on Schedule A to get the mortgage interest deduction.

If you don’t receive a 1098 you should contact your mortgage holder and ask for one. They are legally obligated to send you this form.

Filling out the Tax Form

If you use tax preparation software such as Turbo Tax or an online tax service, the tax software should tell you where to enter the amount of interest. Once you’ve entered the amount of interest, the software should calculate your deduction for you and take it out of your taxes.

Those who use a tax preparer should take the 1098 with them when they get their taxes done. The tax preparer will need in order to apply for the deduction on your behalf.

Those who want to file a paper tax return will have to use a calculator and take the amount out when they fill out the 1040. Once the tax return is filled out it will be submitted to the Internal Revenue Service.

When You Get the Deduction

You will know you’ve received the mortgage interest deduction when your tax return is accepted by the IRS. The IRS will process your tax return and take the mortgage deduction from your taxes.

One thing every homeowner should remember is this, the IRS will only give you the mortgage interest deduction if you apply for it. If you don’t apply for the mortgage deduction you won’t get it and you will end up paying more taxes.