In this world nothing can be said to be certain, except death, taxes, and with our help a mortgage. Owning a mortgage can provide numerous benefits on your taxes, which could end up saving you a great deal of money over the life of the loan. However, before we get into the details, we wanted to give a friendly reminder that taxes are due Tuesday the 17th. So, if you haven’t already paid them, please don’t forget to pay your taxes, you certainly wouldn’t want to pay them if they are late!
One of the major ways homeowners save money is they can deduct interest expenses up to $750,000 of mortgage debt from their income taxes. Most people are surprised at the amount of money they can save on their taxes over the life of the loan. For example, on a $500,000 purchase price, you could save around $33,750 on your taxable income, according to the 2018 deductible interest cap of $750k. Granted, this number will change depending on each situation, but it at least gives a general idea of how much money can be saved. It’s also worth noting, itemizing these deductions means you forgo the standard deduction.
Another key feature of a mortgage is points are deductible, which means in the year paid, you can fully deduct points paid on your loan. Now, the IRS does have a few rules and not everyone will qualify to deduct their full mortgage points, but we can work with you to see if you qualify.
No one likes to pay their taxes but, it’s possible to alleviate a bit of the burden and generally save thousands of dollars over the life of your loan simply by owning a mortgage. Speak with a loan officer at a local branch to see how much money you could be saving on your taxes over the life of a loan.
For those of you who are expecting a refund this year but aren’t quite sure what to do with it, we suggest seeing if it makes sense to make an additional payment on your mortgage or any other outstanding debts you may have.