Mortgage Related Tax Deductions

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blog-author-clayjeffreys2

Spring is just around the corner, and you know what that means – flowers bloom, temperatures rise, and taxes have to be filed!

We all know about two major deductions you get when owning a home – the mortgage interest deduction and deducting your property taxes on your primary residence. There is another one out there that not everyone is aware of – deducting your mortgage insurance.

For the past several years, mortgage insurance has been tax deductible. This deduction is on the list of deductions that are currently under annual review by the government for renewal. The good news is – the mortgage insurance deduction has been renewed again for the 2012 and 2013 tax filing years.

How does one qualify:

  • must be a homeowner and have mortgage insurance on your mortgage (either private mortgage insurance from conventional loans OR mortgage insurance premiums from FHA/USDA loans)
  • must file itemized federal tax returns
  • annual adjusted gross income must be below $100,000 for joint filings ($50,000 for single file). Deductions are available if adjusted gross income exceeds those limits, but it begins to phase out.

What should you do? First, talk to your tax professional to see if you qualify to deduct your mortgage insurance payments from your taxable income on your 2012 tax returns. Also, if you have owned a home for the past couple of years, review your last few years tax returns to see if you eligible for the deduction AND took advantage of the deduction on previous years tax returns. You may be able to file an amended tax return to get more money back from past tax returns.

If you are a homeowner this tax season, you may be able to deduct three expenses from your taxable income – interest on your home mortgage, property taxes on your home, and mortgage insurance. To find out if it applies to you, consult your tax pro today. You can always use the extra cash!!

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