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Taxes Information |
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Deducting Points On Home Refinances
Deduction of Refinance Points Any points that you pay in the refinancing of your residence are tax deductible over the length of the loan in question. The deduction is allowable only if the residence is your primary home and the new mortgage replaces a previous one and/or is used to improve the residence. To the extent that money is taken out to pay off credit cards and non-residence costs, the points may not be used as a tax deduction. Big Deductions By Refinancing Twice If you refinanced your primary residence twice during 2004, you may be in for a very nice surprise. A significant tax deduction can be created when you refinance twice in one year. If you refinance a mortgage, you accelerate the deductible amount of points from the first mortgage and may claim the points from the first mortgage all at once. As an example, assume that I refinanced my home in January 2004 and paid $3,000 in points. Interest rates continued to drop through 2004 and I then decided to refinance again in August. Because I paid off the original loan with the refinance, I am able to accelerate the value of the points of the January loan. So, what tax deductions have I created for my 2004 filing period? Initially, I am going to deduct a percentage of the points off of my latest refinance. The deduction will amount to the total amount of points paid divided by the total months of the loan. This will not be a big deduction, but every little bit helps. In addition to this amount, however, I will also deduct the full $3,000 in points that I paid on my January 2004 refinance! I am able to claim this deduction because I "accelerated" the deductibility of the points by paying of January mortgage with the August refinance. By refinancing twice, I get a lower interest rate and a healthy tax deduction. Ah, the value of owning a home. Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
MORE RESOURCES: One state lawmaker wants to impose a tax on strip club patrons. Another plans to call for higher cigarette taxes. A third will propose putting the state's four percent sales tax back on all groceries. With the state facing a $2 billion to $2.5 billion shortfall this fiscal year and possibly worse financial news next year, lawmakers are searching for ways to fill gaps to avoid slashing education, ... T he tax deadline may be a few months away , but the IRS recommends getting ready early. T he IRS recommends getting all your records together now so you can see what you are missing and still have time to find it. F ind and download all forms you'll need to file your taxes and do a little research to make sure you are getting all eligible deductions and ... Property owners in Wake County are making payment arrangements for their taxes, ABC 11 reports. Property taxes for the third installment are January 5 and should be postmakred or received by January 15th to avoid a penalty. Some out-of-work residents choose not to have taxes withheld from their unemployment checks, but that can be dangerous. Property owners are seeking payment plans on their taxes in Wake County. SHELBY - Long lines formed at the Cleveland County Administrative building Monday as people paid their property taxes at the last minute.Jan. 5 is the final day to pay before interest begins to accrue.Derek Mauney, waiting in a line that stretched down A new poll shows that registered voters in New York appear willing to pay higher taxes in order to prevent spending cuts in the state’s massive Medicaid program. Antrim Township in Franklin County is eliminating property taxes. LANCASTER, Pa. -- The Lancaster City Council unanimously passed Mayor Rick Gray's 2009 budget. The $46 million spending plan calls for a 5 percent increase in property taxes. |
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