Frank Ellis, a Traverse City tax preparation planner and author, explains what homeowners may have available to them in an Examiner.com article, “Mortgage Refinance Tax Deductions for 2016”. Refinancing a mortgage can get one a cheaper interest rate, he says, and involves taking out a new loan and paying off the old loan with it. Ellis says the same deductions are available for refinancing as with a first mortgage. |
The mortgage interest tax deduction is the first described. Mortgage interest is tax deductible if the loan is for a primary or secondary residence not rented, the home secures the loan, and deductions are itemized. These points are provided with more detail. The author also mentions that, with TurboTax online tax filing , taxpayers are asked questions to see if they should take a standard deduction or itemize their deductions. He also points out the right form for indicating what was paid in interest.
Also mentioned is that if mortgage points or PMI have been paid, they might be deductible . Ellis explains how the points of prepaid interest factor into the equation. He also says points can be deducted over the life of the loan, when filing taxes, and are different from points paid when first purchasing the home.
Another point made is that settlement fees are not deductible. Refinancing may involve fees and charges, closing costs that cannot be deducted when filing taxes . This can add up to thousands of dollars, the author points out.
Some rules regarding rental properties are highlighted. Refinancing a rental property is different, and rent received is taxable income that must be reported. What is spent to make that income is usually deductible and includes points, interests, closing costs, and other refinancing fees.
Learn more by going to http://www.examiner.com/article/mortgage-refinance-tax-deductions-for-2016?cid=db_articles
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.
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