The majority of American taxpayers don't itemize their deductions. They just claim their standard allowance and move on. The numbers show that many, maybe even most, homeowners don't deduct their mortgage loan interest. While that may sound crazy to some, for those homeowners with lower to average incomes, it may actually make sense not to itemize. The advantages of itemizing seem to increase with wealth. Make sure that it makes sense for you to itemize your deductions before deciding to do so on your own taxes.
2. Deducting for Two Mortgages.
That vacation home at the Lake you've been dreaming of may be more affordable than you think. You might be able to take deductions for two mortgage loans. You can still qualify even if it's a timeshare and/or you rent it out for most of the year. There are some key rules when doing this though. First, for tax purposes, you're only allowed to designate one property as your main home and the other as your second home. If you rent out the second one, you must spend at least 10% of the rental days each year living in it yourself. If you don't rent it out however, you don't have to spend any time there. Talk to your mortgage lender at the Lake of the Ozarks to see if this is an option for you.
When obtaining a mortgage loan at the Lake of the Ozarks, you incur a few more costs than just the actual loan amount. Some of these extra costs are usually deductible as well. There are two categories: mortgage loan origination fees and maximum loan charges, and loan discount or discount points. Sometimes points can be deducted in full during the year you make your purchase. However, the IRS lists 9 rules to comply with in order for that to happen. If you can't meet those requirements, your points deductions will be spread out over the life of the loan.
4. Deducting Mortgage Insurance Premiums.
In some cases, you can even deduct your mortgage insurance premiums. The IRS regards qualified mortgage insurance premiums as home loan interest, making it typically deductible. This is provided that your mortgage insurance contract is dated after a certain date and your income is below a certain level. Check the IRS website for updated numbers on the tax year you're filing for. Funding fees on VA mortgages and guaranteed fees on Rural Housing Service loans also count as mortgage insurance premiums and can be taken into account for your deduction.
If you're considering itemizing your taxes to take advantage of these homeowner deductions, give me a call at 573-746-7211 with any questions about your personal mortgage situation. When it comes to your home financing needs, I am committed to working with you every step of the way!
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Sr. Residential Mortgage Lender
NMLS #: 493712
2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049
Cell: (573) 216-7258
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.