In the midst of the COVID-19 pandemic, many homeowners wonder if they can avail of some mortgage interest deduction. What is a mortgage interest deduction? This kind of deduction is what is labeled as an itemized deduction. This can be deducted from the AGI, or adjusted gross income can lessen the amount you pay in tax.
As a homeowner, the interest you pay on your loans – when you used the money to buy, build your home, or money used to improve your home – from your taxable income can be applied to the mortgage interest deduction.
This will let you reduce the taxable income for the mortgage interest you have paid for the year. So make sure that you are up to date with repaying your mortgage obligations.
The deduction is bigger in the past, but if your house was bought after December 15, 2017, you could only deduct the interest on the first $750,000 of your mortgage. But still, that is a large amount of money that can help you in reducing your tax.
To qualify for a mortgage interest deduction, you need to meet a set of requirements. How does a mortgage interest deduction work? If your property is a house, apartment, mobile home, condom houseboat, or trailer, then you can qualify. But it doesn’t stop there. Your home must be the collateral for your existing loan, and it must have cooking and toilet facilities included with sleeping quarters as well. In other words, it must be a complete and functioning home.
When money is tight, make sure that you remind yourself that when tax filing season comes, you can use the mortgage interest deduction to save money when filing. Just make sure that your mortgage is secured – there is a land contract or a deed of trust or mortgage that proves your property ownership.
If you want to know more, we are here to help. Drop us a line, and we will do our best to answer your questions.
