Tax preparer unveils how and why to deduct mortgage points when homeowners file their tax return.
Traverse City, MI -- (SBWIRE) -- 05/31/2016 -- Home buyers have one of the largest of debts – a home mortgage – and tax expert Frank Ellis reveals how paying "mortgage points" adds to this, but can be deducted when filing taxes. The fees, known as mortgage points, each equal one percent of a loan. Origination points, and discount points (a form of prepaid interest), add to the monthly totals. Prepaid interest and mortgage points is typically tax deductible.
The author reveals that the entire amount of accrued points, and payments made, for the year can be deducted, unless a home is worth more than $1 million. Then the amount deductible points are limited. It's also limited for excessive home equity debt.
Ellis then goes through various requirements for eligibility. The mortgage must be for a primary residence. Various provisions for the points also apply, including how the rate compared to others in the area. Taxpayers can deduct points using Form 1040, the author says, and are added by itemizing the deductions.
More details are provided, including the need for Form 1098, which should be provided by a lender. Other tips include how to include the information from mortgage points into the tax forms. Frank Ellis also reveals TurboTax as a tool for making this process much easier, since it can be confusing at times. Simple questions enable taxpayers to take the proper deduction without making mistakes.
The article also explains how the points add up, and that paying them in advance can result in reduced loan rates. It discusses other ways homeowners can benefit as well. Ellis also touches on the advantage of paying more for a home up front.
To learn more about the reasons and processes for deducting home mortgage points, read the article at http://internettaxconnection.com/deducting-mortgage-points-on-your-tax-return/
About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.
Internet Tax Connection
945 East 8th Street Suite A
Traverse City, Michigan 49686