Homeownership has always been the "great American dream".
To foster and encourage this dream, Congress has
consistently enacted tax legislation which favors homeowners. Indeed, much has
been written that our tax laws discriminate against renters, by giving unfair
and unequal tax benefits to those who own homes.
Every four years, some candidate for high political
office tries to focus our attention on equalizing the tax laws, and repealing
the homeowner benefits, but these arguments have consistently fallen on deaf
ears. And this coming election year is no different.
For those of us who own homes, here is a list of
the itemized tax deductions available to the average homeowner. Every year, you are permitted to deduct the
following expenses:
Real property taxes, both state and local, can be deducted. However, it should be noted that real estate taxes are only deductible in the year they are actually paid to the government. Thus, if in year 2015, your lender held in escrow moneys for taxes due in 2016, you cannot take a deduction for these taxes when you file your 2015 tax return.
Mortgage lenders are required to send an annual statement to borrowers by the end of January of each year, reflecting the amount of mortgage interest and real estate taxes the homeowner paid during the previous year.
2) MORTGAGE INTEREST

You must understand the concept of an acquisition
loan. To qualify for such a loan, you must buy, construct or substantially
improve your home. If you refinance for more than the outstanding indebtedness,
the excess amount does not qualify as an acquisition loan unless you use all of
the excess to improve your home. However, any other excess may qualify as a
home equity loan.
Let us look at this example: Several
years ago, you purchased your house for $150,000 and obtained a mortgage in the
amount of $100,000. Last year, your mortgage indebtedness had been reduced to
$95,000, but your house was worth $300,000.
Because
rates were low last year, you refinanced and were able to get a new mortgage of
$175,000. Your acquisition indebtedness is $95,000. The additional $80,000 that
you took out of your equity does not qualify as acquisition indebtedness, but
since it is under $100,000, it qualifies as if it was a home equity loan.

The remaining interest is treated as personal interest, and is not deductible.
3) POINTS
When you obtain a mortgage loan, some lenders will allow you to pay one or more points to get that loan. The more points you pay, the lower your mortgage interest rate should be. Whether referred to as "loan origination fees," "premium charges," or "discounts," these are still points. Each point is one percent of the amount borrowed; if you obtain a loan of $170,000, each point will cost you $1,700.

Written by Benny L. Kass
Visit
my website for additional information about Real Estate and our Central Ohio
Market! www.DeLena.com
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