Last week, we talked about three ways to save money on your taxes as a homeowner, and we got a lot of questions asking us “how do you deduct your mortgage interest payments from your taxes?” So, we wanted to take a minute this week and explain the process.
The mortgage interest deduction lets you cut whatever you are paying as mortgage interest from your taxable income. Since this lowers your taxable income, you pay less in taxes.
Here’s how mortgage interest deductions work, and how much they can save you come tax time.
There are things you need to do, though. You have to itemize your deduction, with a 1040, instead of the standard deduction. Right now, it’s $6,300 for single people and $12,600 for married couples. Make sure that you’re paying more than that in interest before you file.
It works especially well at the start of your mortgage. Your first few years are weighted heavily towards your interest payments to work that down, so the tax deductions can be huge at the beginning of your mortgage.
How far along are you in your mortgage payments?
It all depends on what your particular situation is. People paying into the later stages of their mortgage can’t expect to have as large of a deduction, as they have paid off much of the interest in their home. Just keep that in mind and watch that standard deduction threshold, and you’ll be fine.
If you’re a homeowner and want to know more about how a mortgage can save you money on your taxes, call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, or Indianapolis at (317) 550-1515. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?