When you buy your own home, what is the biggest advantage? Having a roof over your head and a place where you can always be safe, right? But, there is another thing that you may not have considered; all the tax perks you can get. What perks are we talking about? Home mortgages interest deduction. Don’t know what that is? Don’t worry, we’re here to guide you.
What Home Mortgages Interest Deduction Is
Home mortgages interest deduction is a term that refers to the tax deductible interest on your home mortgage. What that means is that taxpayers with their own homes are eligible to deduct their tax according to the interest they pay on their home mortgage loan. You can easily claim home mortgages interest deduction if you are a homeowner with a home mortgage loan. How? Read on below.
Claiming Home Mortgages Interest Deduction
If you want to claim home mortgages interest deduction, you start with the Form 1040, Schedule A. You have to itemize your deductions on this form, which means you will not be going the usual route of standard deductions. You have to choose between the two. If you think that’s not worth your time, you may want to consider the fact that Schedule A has other deductible expenses as well, all of which can amount to more than the standard deduction. However, you can complete both your standard deductions and Schedule A and compare them to see which benefits you more as a whole.
Do You Qualify for Home Mortgages Interest Deduction or Not?
Home mortgages interest deductions have specific eligibility criteria which you must be aware of before claiming it. At the moment, mortgage interest includes the amount you pay on loan taken for buying a home, on construction loans, and on home equity lines of credit. You can only claim home mortgages interest deduction on your main and/or second home, not on any more homes you may own. The loan must be in your name and must be a legally binding. Furthermore, the security for the loan must be your own home. There are no restrictions to the kind of home you have; according to Internal Revenue Service, it can be any kind of property with “sleeping, cooking and toilet facilities”.