Are You Claiming Itemized Deductions on Your Mortgage?
If you own a home, you may want to consider the value of itemizing your tax deductions this year, and every year into the future as long as you hold a loan. The benefit of doing so is simple- you may be able to deduct the interest paid on the mortgage on your federal income taxes. This may push you above the standardized deduction amount, making it better to deduct through itemized deductions.
What You Need to Know
In order to know if you should deduct your mortgage interest through standard deductions or through itemized deductions, do work through the tax preparation process to determine how many deductions you have.
- You will need to file Form 1040 and itemize your deductions on Schedule A, Form 1040.
- Include mortgage interest you paid on the loans to buy a home, construction loans or home equity lines of credit. You can deduct just the amount of interest paid, not the principle payments, on your taxes.
- You can efile with this type of deduction. This is not a limitation to do so.
- You must also be legally liable for the loan to qualify. You cannot file these deductions for a home you do not own, even if you are paying the mortgage for someone else.
- The mortgage must be a form of secured debt on a qualified home loan in order to qualify for this deduction.
If this applies to you, determine if you should itemize your deductions this year. For many people, especially those paying thousands of dollars in mortgage interest each year, itemized deductions can help you to get more back from the IRS.