As you prepare your taxes this year, you may or may not notice a re-designed form 1098, the form used to report the amount you paid in mortgage interest for the tax year. Although there have not been any changes made to the mortgage interest deduction regulations in several years, in 2015 the U.S. Congress did pass new rules with regard to how mortgage interest is reported. The form now requires more details to ensure homeowners’ properties and mortgages indeed qualify.
According to an article published by Kiplinger, titled Mortgage Interest Tax Deductions May Get Extra Scrutiny This Year, “The new form will include the mortgage origination date, the balance at the end of last year and the address of the property securing the loan, as well as other information useful to the IRS.” As a result, we could see the IRS perform more audits that specifically focus on mortgage interest.
Therefore, it is important for homeowners to have a clear understanding of what properties qualify for mortgage interest deductions as well as how much and what kind of debt falls within the IRS guidelines before filing your taxes this year.
The Kiplinger article provides specific details and helpful examples, click here to read the entire article.
Most homeowners are aware, or at least should be aware, of tax breaks available to them via various homeowner tax laws. The homeowner tax breaks are designed to make owning a home more appealing and, in many cases, more affordable to the home owner.
In the article 2017 Mortgage Deduction: What Every Taxpayer Should Know published by FoxBusiness.com, the journalist details the types of tax breaks homeowners can take advantage of when filing their taxes each spring. The most common, the mortgage interest deduction, journalist Dan Capinger describes by writing, “Homeowners can typically take the mortgage interest they pay for loans on their home and include it in their itemized deductions.” This can apply to the cost of buying or building your home; even major home improvements can qualify. The current restriction is that the principal balance falls below $1 million for tax payers that file jointly.
However, as the United States prepares to inaugurate president-elect Trump, changes to the mortgage interest deductions are anticipated. During the 2016 presidential campaign, Trump expressed interest in limiting itemized deductions to $200,000 for joint filer; subsequently resulting in a lower cap on mortgage interest deductions.
The potential changes aren’t expected to make any significant impact to most homeowners. Therefore, homeowners should still look for many of these tax benefits to continue to be available, providing access to helpful tax cuts.
Read the entire article for additional details on tax laws available to homeowners.
Photo Credit: Darren Shaw