When you get a mortgage to purchase a home, there are deductions that the IRS will allow. The following is a list of some deductions that people might forget when buying a home.
POINTS– Points on a home loan are tax-deductible, if they are used to bring down the mortgage interest rate. A point is 1% of the loan amount. On a $200,000 mortgage, a point would equal $2000.00. Only consider paying points if your intentions are to own your home for more than 5 years.
PRO-RATED MORTGAGE INTEREST– When you are buying a home depending on what day of the month the home closes, the buyers pay either a small or large amount of pro-rated mortgage interest. This amount is normally a couple of $100.00. What ever the amount, a home buyer can write that amount off.
PRE PAYMENT PENALTIES– Although it is rare that a home loan today would have a pre-payment penalty, on some occasions you will still find one. If your mortgage does include a pre-payment penalty and you pay off your loan early, these penalties are tax-deductible.
MORTGAGE INTEREST TAX DEDUCTIONS– As far as deductions go, the mortgage loan interest write off is a major benefit in owning a home. This is the best tax break afforded to homeowners. Mortgage interest is tax-deductible on mortgages up to 1 million dollars ( $500,000 if married and filing separately). In addition, the interest you pay on loans secured by your home and used for a purpose other than to buy, build or improve your home are tax-deductible. If you used a Home Equity Line of credit to purchase a car, the 2nd mortgage would be tax-deductible.
Please visit my web site at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view all local area homes for sale.