Business Booster, Tax Tips

Tax Write-Offs to Remember from the Home Loan Process

January 4, 2011 by · 4 Comments 

Homebuyer Write-Offs to Remember by James BarathCan you believe it’s already 2011? If you bought a home in any of the great communities in Northwest Indiana last year, make sure to add these tax write-offs to your New Year’s Resolution.

Write-offs are the government’s way of rewarding taxpayers when they’ve done something the government likes. And to judge by the write-offs, the government likes it when people borrow money to buy a house. There are write-offs aplenty, many associated with the home loan process of which homebuyers often forget.

Make sure you take advantage of every break the IRS will give. Here are a few write-offs many new homeowners tend to forget:

  • Points – According to the IRS, origination fees charged as points must be paid for the use of money, (for example, to obtain a lower interest rate) in order to be tax deductible. Origination fees that constitute a “service fee” are not tax deductible. Question to be asked, “Does the fee apply to the use of money, or is it a service charge?
  • Pre-Payment Penalties – Unforeseen circumstances often cause borrowers to payoff their mortgages sooner than expected. Fortunately, pre-payment penalties are tax deductible, which helps ease the pain.
  • Pro-Rated Real Estate Taxes – Even if the seller sent the tax collector the check, chances are that you the homebuyer paid a pro-rated portion of the real estate taxes for the year at closing. Be sure you know to deduct your fair share.
  • Pro-Rated Mortgage Interest – Depending on when in the month you closed on the home purchase, buyers pay either a hefty or a tiny amount of pro-rated mortgage interest for that month. Big or small, you can write that off. The Final Closing/Settlement Statement will show just how much you’re due.
  • Home Construction Loan Interest – As long as the home construction period doesn’t last more than two years before you make the new place your “principal residence“, you can write off the interest for that home construction loan.

It pays to pay attention – all these write-offs can add up to some serious savings when tax time comes around.

Do you need professional tax help with these tax write-offs to remember from the home loan process in the New Year? Contact me today for a referral to a great local tax advisor to maximize your tax savings.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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Comments

4 Responses to “Tax Write-Offs to Remember from the Home Loan Process”
  1. John Cannata says:

    James – great list of items for home buyers. They (we) sometimes forget about the write-offs we have from our home loan purchase/refinance.

  2. John Cannata says:

    James – great list of items for home buyers. They (we) sometimes forget about the write-offs we have from our home loan purchase/refinance.

  3. John Cannata says:

    James – great list of items for home buyers. They (we) sometimes forget about the write-offs we have from our home loan purchase/refinance.

  4. Jim Sims says:

    Thanks for the reminder on this. Every little bit at tax time helps!!

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