For those who file U. S. tax returns, owning a home can help to significantly reduce your tax liability, and the first year often carries the biggest deductions. Mortgage interest, for example, is deductible from gross income. So are property taxes. In fact, if you closed a real estate transaction last year, you undoubtedly prepaid some interest before your first payment was due, and that amount is deductible as well.
But what about loan points? Do you know how paying loan points can affect your bottom-line tax liability? Do you know that the I. R. S. applies different rules for refinances versus purchase-money loans? And if the seller pays your loan points, can you deduct them? . . . read more about Loan Points.
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