· Home Mortgage Interest
· Real Estate Taxes
But did you know that there are 3 MORE VERY IMPORTANT ADDITIONAL tax deductible items that are usually overlooked?
These are 3 important deductions that every homebuyer needs to know!
1. Points Paid By Seller (for borrower):
You say what? How could dollars contributed by the Seller (which shows up on the Seller side of the HUD statement) be a tax deduction for the buyer?
Well according to the IRS, their position is this:
“A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage”
The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points.
If you purchased a home and the seller paid “points”, these are fully deductible to you as the homebuyer! They are not deductible to the home seller.
Important Exception: The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Also, the deduction cannot exceed the amount of money you used as down payment, earnest money or other contribution totals.
Tip: Make sure your lender/escrow doesn’t apply the seller paid points directly to charges such as appraisal fees, credit reports, document preparation fees, etc. The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.
2. Mortgage Insurance Premiums: New IRS Effective Rule January 1, 2007
You can take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2009 for qualified mortgage insurance in connection with home acquisition debt on your qualified home.
Those that had to pay an up front Mortgage Insurance Premium at closing are allowed to claim that amount as a deduction.
Important Exception: If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. See Line 13 in the instructions for Schedule A (Form 1040) and complete the Qualified Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums.
Tip: Don’t forget to deduct the mortgage insurance premium included in your mortgage payment every month at the end of the year as well, and for the years to come.
3. Late Charges on Mortgage Payments:
You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan.
Advice: Please consult your tax accountant for advice regarding restrictions and limitations for your personal situation.
Well according to the IRS, their position is this:
“A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage”
The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points.
If you purchased a home and the seller paid “points”, these are fully deductible to you as the homebuyer! They are not deductible to the home seller.
Important Exception: The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Also, the deduction cannot exceed the amount of money you used as down payment, earnest money or other contribution totals.
Tip: Make sure your lender/escrow doesn’t apply the seller paid points directly to charges such as appraisal fees, credit reports, document preparation fees, etc. The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.
2. Mortgage Insurance Premiums: New IRS Effective Rule January 1, 2007
You can take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2009 for qualified mortgage insurance in connection with home acquisition debt on your qualified home.
Those that had to pay an up front Mortgage Insurance Premium at closing are allowed to claim that amount as a deduction.
Important Exception: If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. See Line 13 in the instructions for Schedule A (Form 1040) and complete the Qualified Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums.
Tip: Don’t forget to deduct the mortgage insurance premium included in your mortgage payment every month at the end of the year as well, and for the years to come.
3. Late Charges on Mortgage Payments:
You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan.
Advice: Please consult your tax accountant for advice regarding restrictions and limitations for your personal situation.
For more information on Home owner/buyer tax deductions go to:
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