One of the greatest benefits of purchasing a home used to be the deductions it gave you on your annual income taxes. Those deductions are still available, but changes in tax laws make it more challenging for many homeowners to take advantage of them.
If you still have enough deductions to itemize your income tax return, review the list below to be sure you are maximizing those deductions.
Home acquisition mortgage loan fees These are fees paid to obtain the mortgage on your primary home (points, origination fees and lender fees). The amount you paid (if any) for origination fees and discount points is listed on your 1098 Mortgage Interest Statement. If you haven’t received your statement, contact your lender. Consult with your tax advisor regarding the deductibility of lender fees.
Prorated real estate taxes If you bought or sold property last year, remember to deduct any prorated real estate taxes you paid at closing. Even if the other party remitted the payment to the tax collector, you can deduct your share on your 2019 filing if you were charged prorated tax.
Prorated mortgage interest in the year of property purchase or sale If you bought a residence and took over an existing mortgage, you can deduct your prorated interest share for the month of the sale. Your final closing/settlement statement (more commonly referred to as a Closing Disclosure) shows your prorated share of the mortgage interest.
Real estate taxes Listed on your tax statement from your city/county/school district
Mortgage interest paid for the year Listed on your 1098 Mortgage Interest Statement PMI/MIP According to the IRS website, “Mortgage Insurance premiums qualify for residence interest." Be sure to talk to a CPA or tax preparer to verify this information before you file your taxes. First Bank is not a CPA or tax preparer/advisor.
Again, you only qualify for these deductions if you itemize your taxes using a schedule A and not the standard deduction. Last year, the number of homeowners who claimed these deductions decreased by more than 50% because the standard deduction increased. Consult your tax preparer/advisor for more information.
Important Note: It is important that you contact your tax advisor or visit the IRS website at www.irs.gov and look for publication 530 if you have any questions on filing your income taxes with home tax deductions. First Bank is not a tax advisor company and this letter is for information purposes only.
Questions? Call us at 469-277-3535
Read other home related information on our blog.