Mortgage insurance in the simplest of terms is the backup plan for a lender. In the unfortunate event that the borrower is unable to repay the loan, the lender can cash in the mortgage premium and recover the losses. However, there is more to it than what meets the eye. Here are some more details of this rather intriguing insurance and why you should opt for it.
What Is It?
Statistics reveal that most home buyers pay less than 20% of the entire property cost as up front or commonly known as down payment. Read More
For years, taxpayers have been able to deduct home mortgage interest on their primary and second homes as an itemized deduction, subject to certain limitations. The interest deduction was limited to the interest on up to $1 million of acquisition debt and $100,000 of equity debt.
Acquisition debt is debt incurred to purchase, construct or substantially improve a taxpayer’s principal or second home. So when you purchased your home, that original loan was acquisition debt, and if you later borrowed additional money that you used to add a room, pool, etc., that loan was also acquisition debt. However, if the total of all of your acquisition loans exceeded the $1 million limit, then the interest on the excess debt over $1 million was not deductible as acquisition debt interest. Read More
This is the fourth in a series of four articles on the mortgage interest deduction. (Read Part I, Part II, and Part III) Reverse mortgages have become increasingly popular as a vehicle for retired taxpayers to help fund their retirement. It’s hard to watch TV very long without seeing a pitch for reverse mortgages. What are the characteristics of a reverse mortgage, what are the tax implications, and what do taxpayers need to be aware of in regard to these loans? These are sometimes referred to as lifetime mortgages or home equity conversion mortgages (HECM).
This is the third in a series of four articles on home mortgage interest. (Read Part I and Part II). There are several special situations relating to deductions for home mortgage interest and other costs. This is a brief overview of each. You should check with your tax professional should any of these apply to you.
This is the second in a four-part series on home mortgages. (Click here to read Part 1 – The Home Mortgage Interest Deduction) We will examine what can be deducted as home mortgage interest. Interest on the debt is deductible up to the statutory limits on the amounts of deductible debt ($1,000,000 for acquisition debt, $100,000 for home equity debt). Interest on excess debt is personal debt and not deductible. In addition, any amount of home equity or refinanced debt that is not used build, buy, or improve the residence is also classified as non-deductible personal debt.
This is the first in a four-part series about home mortgage interest. One would think that deducting home mortgage interest on your taxes would be a simple, straightforward process. And for most taxpayers, it is. You get your 1098, enter the amount of interest shown on the form, and proceed to the next item. For others, the situation may not be quite so simple.
When you see those TV ads for home solar power, you may get the impression that Uncle Sam is going to pick up 30% of your cost and you only have to come up with the other 70%. That is not necessarily the whole picture. True, the federal government has a 30% tax credit for the cost of a qualified solar installation (some states also have solar credits or other incentives). However, the federal credit is non-refundable and can only be used to offset your current tax liability, and any excess carries over to future years as long as the credit still applies in future years. Currently, the credit is allowed through 2021. What this means: You may not get all the credit in the first year as you might have been led to believe or assumed based upon the TV ads.
Next January when you receive your mortgage interest statement from your lender, you might notice some changes on the Form 1098. Beginning in 2016, the mortgage interest statements must reflect the outstanding principal balance, the loan origination date, and the address of the property that secures the mortgage. All of this is information that has not traditionally been included on the mortgage interest statement. However, due to the complexity in the laws in regard to the deductibility of mortgage interest, these are welcome changes. In a perfect world, everything would be simple and there would be no need for this information, but we must play the hand we are dealt. Let’s look at each of these requirements and the reasons for each.
One would think that the deduction for home mortgage interest would be rather straightforward, but with Congress and the IRS involved, that assumption is not always a correct one. If you itemize deductions, home mortgage interest may be deducted on Schedule A. Note also that interest paid on a rental property falls under different rules and is not the subject of this article. Read More