Tax Tip #7: Home Equity Loans

This is the last tax tip in this series of posts. Thank you for reading. If you have more questions, we urge you to seek the counsel of an experienced tax professional.

#7:  Home Equity Loans

Unfortunately in this economy, people sometimes need to take out a home equity loan to pay for things other than their home that they couldn't normally afford, such as tuition. Can you get a tax break for that? Perhaps. It depends on the situation. Part or all of the interest that you pay on the loan could be deductible for up to $100,000 ($50,000 if you are married filing separately).

The amount that you can deduct interest on is the difference between what your home is worth and what you owe on your mortgage. (Example: if your home is worth $250,000, and your mortgage is worth $200,000, you are able to deduct interest on $50,000. If you take out a loan larger than that, such as $80,000, you cannot deduct interest on the extra $30,000.)

If you are faced with the alternative minimum tax (AMT), you won't be able to deduct any of the interest on a home equity loan. This applies if you use the money for tuition or something else not related to your property.

If you did use the money to renovate and improve your property, you will be able to deduct all of the interest whether you are faced with the AMT or not. (But still only the $50,000, not the full $80,000, as per the example above.)

Click here to view Tax Tip #6.

Once again, if you have any questions about your own specific mortgage situation, call us at 877-828-8851. We can help!

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Tax Tip #6 - Mortgage Discount Points

#6 - Mortgage Discount Points

Sometimes people choose to pay a point toward their mortgage upfront at closing so they can get a lower interest rate. Each point is the equivalent of 1 percentage of your loan. This can save you money in the long run, even if it doesn't go toward actually paying off the loan. Many people do this. If you opted to go this route too, you may able to deduct them if you meet all of the following criteria:

• The loan was used to buy, improve or build the home
• The loan is secured by your primary residence
• Paying points is normal where you live
• The points are calculated as a percentage of the loan principal
• The points are clearly outlined on the buyer's settlement statement
• The amount of cash you put into buying your home is as least equal to the amount you were charged for the points you paid on the loan

Also, if you paid points to refinance your home, you are able to deduct a portion of what you paid each year, spread out over the life of the loan. Ask a tax professional for more specific details about this if you need help calculating it for your own specific situation. To learn more about mortgage discount points or any other mortgage-related topics, feel free to call us at 877-828-8851.

Click here to view Tax Tip #5.

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Tax Tip #5: Disaster Damage to your Home

#5 - Home Damage Caused by a Disaster

If your home experienced damage from a disaster, such as a tornado, hurricane or fire, you may be able to deduct the amount that was not reimbursed by your home insurance. To find out how much you are able to deduct, first figure out what your Adjusted Gross Income is. This refers to the amount that you will actually be taxed on after you subtract all of your expenses and deductions. These are also known as your "above the line" deductions.

Once you know what your AGI is, multiply it by 10%. Add $100. Then subtract that from the amount of damage not reimbursed. This gives you your damage deductible. If you need help, seek the advice of a tax professional.

For any mortgage-related questions, feel free to call Mortgage Jive at 877-828-8851. Click here to view Tax Tip #4.

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Tax Tip #4: Adding "Green" Home Improvements

#4 - Energy Efficient Home Improvements

Did you have a big remodeling project this year? You may be able to deduct some of those expenses if they were energy-efficient improvements by way of the Nonbusiness Energy Property Credit. Doing things like installing insulation, new windows or furnaces qualify. However, you can only claim $500 over your lifetime.

If you have installed a solar electric system, solar hot water heaters, wind turbines, fuel cell property, or geothermal heat pumps in your home, look into the Residential Energy Efficient Property Credit. This credit will give back 30% of what you spend on running those features. There is currently no cap on the amount of credit, except for on the fuel cell property. Find out if your home qualifies!

In fact, the IRS is suggesting that before you purchase energy-saving home improvement items, make sure to check for a certification statement first. You can find these on the packaging of the item, or through the company that sells them. For more information, view form 5695. Going green can really pay off!

If you have any questions, call us at 877-828-8851! Click here to view Tax Tip #3!

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Tax Tip #3: Paying Property Tax

#3: Paying Property Tax

If you own a home, you were definitely responsible for property tax. The good news is that it is deductible. You usually pay these taxes as part of your monthly mortgage payments, so your lender will have all the information you need spelled out on your annual statement. Sometimes real estate taxes can be deducted on your federal tax return whether they are deductible by the state's rules or not.

If you happened to buy a house this year, you no doubt paid plenty of property tax upfront. Be sure to find out how much of that you can deduct. It can be found on your settlement documents. Ask a tax professional for help if you have any questions.

Click here to view Tax Tip #2.  If you have any questions regarding your mortgage or a future mortgage, Crosscountry Mortgage can help! Give us a call at 877-828-8851.

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Tax Tip #2: Paying Interest on a Mortgage

With the tax deadline around the corner, we thought we would provide a few homeowner-related tax break tips over the next couple weeks that may help you.

#2: Paying Interest on a Mortgage

Your lender will be sending you a 1098 form that details how much interest you paid last year. Most likely your loan is less than $1 million (or $500,000 for those married but filing separately). In that case, you are allowed to deduct 100% of your interest and property taxes.

If your mortgage exceeds this, the IRS will limit the amount that you can deduct. In order to claim this deduction, however, a bit of itemization is required. To do this, you must calculate your total itemized deduction, compare it to the standard deduction from the IRS and then take whichever is higher.

Click here to view Tax Tip #1.  As always, if you have any mortgage-related questions, Crosscountry Mortgage would gladly answer them! 877-828-8851.

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Tax Tip #1: Selling your home and making a profit

The tax season is now upon us. We will be posting homeowner-related tax break tips over the next couple weeks that may help you.

#1: Selling your home and making a profit:

Congratulations! This is hard to do in this economy. Selling your home for more than you paid gives you a "capital gain". This gain that you made on your home is exempt from income taxes as long as you meet the following criteria:

• The gain is less than $250,000 single, or $500,000 for married couples filing jointly
• You owned the home for at least two years
• You lived in it for two out of the last five years before selling

If you do not meet these requirements, the IRS will only partially tax you if you had to sell your home because of one of the following:

• Death
• Divorce or legal separation
• Multiple births from one pregnancy
• Damage from a natural or man-made disaster
• Loss of a job that grants you unemployment compensation
• Change in employment that makes paying the mortgage and other basic expenses difficult
• Involuntary conversion under eminent domain law by the local government

For more specific information about this, please visit the IRS website directly.  If you have any mortgage-related questions, call Crosscountry Mortgage at 877-828-8851.

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