By Tim Frye
The home mortgage interest is one of the biggest tax breaks available to the modern day homeowner and taxpayer. The deduction is available to those who itemize deductions on the Schedule A, and can be deducted along with other home related expenses such as real estate property taxes. Many times a taxpayer’s mortgage interest will assist them to be able to surpass the standard deduction and itemize on their tax return. This article will discuss the details of the mortgage interest deduction and how a taxpayer can calculate it and claim it.
The mortgage interest deduction is inclusive to the interest a taxpayer paid on any loans to purchase their home, any home equity lines of credit, and any loans used for the construction of the home. Remember the amount available to be claimed is limited. Taxpayers can only deduct the interest paid on primary and secondary homes, and not interest paid on any homes in excess of these set amounts.
In order for taxpayers to be eligible to deduct their home mortgage interest, the following condition must be met:
-Form 1040 must be filed, and it must be a long form using itemized deductions
-Taxpayer must be personally liable for the loan; payments cannot be deducted that were made on behalf of someone else.
-The mortgage must be a secured debt on a qualified home
What Documents Do I Need to Claim the Mortgage Interest Deduction?
In order to officially claim the deduction for home mortgage interest, the taxpayer must have the form 1098-INT, which details the exact amount of mortgage interest paid for the year. And if the taxpayer bought or sold a home, the HUD-1 Settlement Statement is required so the preparer can calculate the amount of points and loan origination numbers that are permitted for deductions.
For assistance regarding the deduction, taxpayers can view the IRS Publication 936, the 1040 add on form Schedule A, and the instructions for the Schedule A.