Homeowners Save With Mortgage Tax Deductions
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- เผยแพร่เมื่อ 21 มี.ค. 2023
- Are you a homeowner with a mortgage? Did you know that you may be eligible for some tax deductions? In this video, we'll cover the basics of mortgage tax deductions and how they can benefit you.
First of all, let's define what a tax deduction is. A tax deduction is a reduction in the amount of taxable income you have, which can lower your overall tax liability. So, if you have a mortgage on your home, you may be able to deduct some of the interest you paid on your mortgage from your taxable income.
To be eligible for the mortgage interest deduction, you must meet certain criteria. For example, the mortgage must be for your primary residence or a second home that you use for personal purposes. Additionally, there are limits on how much interest you can deduct based on the size of your loan and when you obtained it.
Another tax deduction related to homeownership is the property tax deduction. If you pay property taxes on your home, you may be able to deduct a portion of those taxes from your taxable income. Again, there are limits and criteria for this deduction, so be sure to consult with a tax professional or use tax software to determine your eligibility and the amount you can deduct.
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Very helpful and detailed , starting with the definition of Home in IRS lingo
Thanks for watching! Appreciate the feedback!
I understand that one should itemize only if the deductions exceed the standard deduction. For example, a single HOH (home owner with dependents) standard deduction would be $19k.
But if your mortgage interest is $3k and property tax is $5k then your state income tax would have to be over $11k to make sense not just going the standard deduction route?
Hi Ben! Had to ask my cpa on this one! Here is his response:
taxes are capped at $10K, so in this example if your property taxes are $5K and you have state income tax of $11K, you only get credit for $5K of the $11K…for a total tax deduction of $10K ($5K of prop and $5K of state income tax). If your mortgage interest is $3K, then you are still sitting at $13K of possible itemized deductions…so the standard deduction would be the way to go - unless you have enough charitable contributions to get past the standard deduction.
Thank you for the information. Is the Mortgage tax deduction only eligible for Head of Household?
Definitely check with a CPA, you can take the 1098 form and deduct on one return, or if you file separately I would think you can split. A CPA would know the pros/cons for sure
Can we either claim standard deduction and mortgage deduction seperately?
Once you own a home, the amount of interest and taxes should put you over the standard deduction. So you would no longer claim the standard, it would be more to include the mortgage, etc. And now you could add more things like charity etc. THIS IS NOT OFFICIAL TAX ADVICE, so check with your tax advisor. good luck!
I am little confused, is this benefit only for those homeowners who purchased home in 2023 ? What if bought few years back like 2020
Hi! Thanks for watching and great question! EVERY YEAR (yea!) you get to deduct mortgage interest and property tax paid on your income ta x return. The title is just with a year, so people know the information is recent. Sorry for the confusion!
But shouldn't you subtract the amount of interest you have paid on that loan as well?
Yes! I talk about that at 2:39 :) Thanks for watching!
Is it also same for Canada ( British Columbia)?
Please Advise
I’m not sure about Canada. I was talking about US. Check with a professional in your county for sure. Thx for watching!
To calculate interest on your taxable income isnt the interest supposed to be calculated with a marginal tax rate and not just a flat rate?
Hi Hockeymaster! Thanks for commenting! People should definitely check with their cpa. I tried to keep this simple for people to understand in a simple way. But you are probably right!
What if the loan is more than 750k and the lender sent you a 1098? You can still deduct the interest, is that correct? Thank-you!
Thanks for the question. The lender sends you all interest, regardless of what the IRS laws are. It is up to you or your Cpa to figure out what is /is not dedcutible. So it can get complicated, the math, to back out of the 1098 the unusable portion per the IRS laws. For that reason I choose to pay a professional to do my taxes!
This is my question as well. I am hoping to get this answer as well.
what’s the definition of income
Income you earn, from a job. It can also be from savings, dividends, other investments. What you report on your tax return.
Cut the the 30 sec intro noise and you'll be good
Hey thanks for that feedback!!!! I will get right on it!!!!!