Interesting Facts about Interest
July 10, 2008 – 9:30 amBe wise on how you include mortgage interest when calculating your tax returns. Â
Mortgage interest owners pay on loans up to a million dollars ($500,000 if you use the married filing separately status) is deductible, provided they used the money to buy, build, or improve their home.
Mortgage interest they pay on loans secured by home and used for a purpose other than to buy, build, or improve your home is deductible for loans up to $100,000 ($50,000 if they use the married filing separately status) or to the extent of their home equity, whichever is less. As they gain equity in their home, use these lines of credit wisely: If they fail to make the payments, they put your home at risk.
Lastly, let’s not forget points, also called loan origination fees. One point equals one percent of their loan. Points they pay (and even points the seller pays) when they purchase their home are generally deductible in full the year they pay them. Alternatively, they may amortize the points over the term of your mortgage. The wise choice is usually the immediate deduction, but not always.
2 Responses to “Interesting Facts about Interest”
Question:
Taxpayer has $800k mortgage on vacation house.
Taxpayer lives in a co-op & is allocated interest & taxes based on the shares he owns in the co-op.
How do you calculate the interest deduction under the $1m limit mortgage debt limit???
By dl on Aug 15, 2008
Dear friend,
please check your personal Email. I’ve responded to your question there.
Alan
By JAB on Aug 15, 2008