max mortgage interest deductable
michael
what is the maximum mortgage interest I can deduct in my tax return?
If can pay additional mortgage interest for current year , do I benefit by doing so?
thanks
Michael
John A. Weeks III
<m...@yahoo.com> wrote:
> Hi,
>
> what is the maximum mortgage interest I can deduct in my tax return?
There are some obscure limits, like the amount you deduct cannot be
more than the value of your house, and the amount cannot be more
than $1-million ($100K for h/e loans), and some states have limits.
You are not likely to hit them if you have a conventional loan.
> If can pay additional mortgage interest for current year , do I benefit by
> doing so?
Benefit is the key word here. Since you have to pay $1 in mortgage
interest to get 30 cents in tax benefit, this is a very poor deal.
You would not go out of your way to pay mortgage interest just to
get the deduction.
But, if you already have a mortgage, or cannot buy a house without
a mortgage, certainly do take advantage of the mortgage interest
tax deduction. If you can pay down your loan early, the savings
on payments on the back end are fantastic. But when you do pay
down your loan, pay extra principal, not extra interest. Paying
extra principal will save you big money in the long run, whereas
paying extra interest will only delay the due date on your payments.
You get no long term savings.
-john-
--
====================================================================
John A. Weeks III 952-432-2708 jo...@johnweeks.com
Newave Communications http://www.johnweeks.com
====================================================================
John H. Fisher
(michael) writes:
>
>what is the maximum mortgage interest I can deduct in my tax return?
Your home mortgage interest deduction is limited to the interest on the part of
your home mortgage debt that is not more than your qualified loan limit. This
is the part of your home mortgage debt that is grandfathered debt or that is
not more than the limits for home acquisition debt and home equity debt. Table
1 can help you figure your qualified loan limit and your deductible home
mortgage interest.
Home acquisition debt is a mortgage you took out after October 13, 1987, to
buy, build, or substantially improve a qualified home (your main or second
home). It also must be secured by that home.
If the amount of your mortgage is more than the cost of the home plus the cost
of any substantial improvements, only the debt that is not more than the cost
of the home plus improvements qualifies as home acquisition debt. The
additional debt may qualify as home equity debt (discussed later).
The total amount you can treat as home acquisition debt at any time on your
main home and second home cannot be more than $1 million ($500,000 if married
filing separately).
>If can pay additional mortgage interest for current year , do I benefit by
>doing so?
>
If you pay interest in advance for a period that goes beyond the end of the tax
year, you must spread this interest over the tax years to which it applies. You
can deduct in each year only the interest that qualifies as home mortgage
interest for that year.
There is an exception, when it comes to points and prepaid interest. If you
pay off your home mortgage early, you may have to pay a penalty. You can deduct
that penalty as home mortgage interest provided the penalty is not for a
specific service performed or cost incurred in connection with your mortgage
loan.
You'll find more complete information at the following URL:
http://www.irs.gov/formspubs/page/0,,id=12836,00.html
"Jack" - John H. Fisher - TaxSe...@aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html
Where Ignorance is bliss, 'tis folly to be wise!=:)
darkness
limiting total deductions. Right now, this only effects 2.5 million
taxpayers, but by 2013 I believe it is projected to hit as many as 30
million taxpayers.