FHA borrowers often invest in energy-efficient upgrades, modern insulation, even solar heaters. Refinancing an FHA home loan to lower the interest rate is another way to save, and for some homeowners tax legislation could help improve the bottom line even more.
Some borrowers are now eligible to deduct some of their FHA mortgage insurance premiums on federal income tax returns. According to the FHA official site, FHA loan applicants who closed their transactions between and may be eligible based certain conditions spelled out in IRS rules. Purchase and refinance transactions closed between through may be eligible for the deduction.
To determine eligibility for the mortgage insurance tax deduction, borrowers should contact the Internal Revenue Service or consult with their professional tax preparer. For more information on extenders and other tax questions, please consult your tax advisor. Share this blog:. We get paid to keep up on the latest financial news. Tax Insights. January 14, August 10, Read about the tax impact of a mortgage interest deduction To be deductible, you had to have paid mortgage insurance under an insurance contract issued on or after January 1, Dale Jensen, CPA.
In that case, the tax deduction should not affect your home buying and mortgage paying decisions. Fewer homeowners have written off their home mortgage interest after because the TCJA raised the standard deduction. This meant fewer Americans had an incentive to itemize their deductions with the IRS. The IRS has used tax credits as incentives for homebuyers before, most recently during the housing crisis of and Some states still offer targeted tax credits to encourage home buying in specific areas.
With such low rates, mortgage payments are more affordable than ever. Homebuyers have not needed tax incentives to encourage buying or refinancing. But if you do decide to use it, the mortgage interest deduction is a nice perk, and yet another way homeownership can bolster your personal finances.
The Mortgage Reports does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.
You should consult your own tax, legal and accounting advisors before engaging in any transaction. How Soon Can I Refinance? How Often Can I Refinance? It Is Worth Refinancing For 0. Talk to a Lender: What is the mortgage interest deduction? Verify your home loan eligibility Nov 11th, In this article Skip to… Who can deduct mortgage interest? Mortgage interest deduction limits How tax deductions help homeowners Should you claim the mortgage interest deduction?
Should the deduction affect your home buying decision? Politics behind mortgage tax deductions Who qualifies for the mortgage interest deduction?
The Tax Cuts and Jobs Act of changed the rules for the mortgage interest deduction. Mortgage interest deduction limits The amount of mortgage interest you can deduct depends on the type of home loan you have and the way you file your taxes.
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