Napa Mortgage News

Dale DiGennaro  
                                                                                                          

Custom Lending Group 
1700 Soscol Ave., Suite 22

Napa, CA 94559-2836
(707) 252-2700 
dale@clgroup.net 
www.customlending.net

Reap the tax deductible rewards of home ownership!

If you purchased, sold or refinanced your home in 2015, tax season is the best time to reap the benefits of being a homeowner! Take advantage of some of these tax breaks today and you could enjoy a bigger return 
in April!

Mortgage Interest. For most homeowners, the bulk of your mortgage payment is going towards interest – and that’s a big tax break for you! The mortgage interest on your primary residence is fully tax deductible, unless, of course your loan is more than $1 million.

You can also deduct late payment charges as home mortgage interest as long as the payment was not late due to a specific service received in connection with your home loan. Also, if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).

Property Taxes. Your property taxes - the annual taxes based on the assessed value of your property – can also be deducted. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners' insurance went into an escrow account (impounds) when you closed on your mortgage. You can also review your cancelled checks to determine your total real estate tax deduction.

Loan Points. Any points you paid to get a better rate on a home loan (also known as "buying down the rate"), are tax deductible in the year you made the purchase as long as:

• The loan is secured by your primary residence and it was used to buy, improve or build the home.
• Paying points is an established business practice in your area;
• The points are computed as a percentage of the loan principal;
• The points are clearly defined on the buyer's settlement statement; and
• You put cash into your home purchase in an amount at least equal to the points you were charged.

Loan Points on a Refi. The points you paid on a refinanced loan may also be tax deducible, however in most cases, the points must be deducted over the life of the new loan. So if you paid $2,000 in points to refinance a 30-year mortgage, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan.

Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan, when combined with your first mortgage amount, increases the debt on your home to an amount more than the property's actual value, you’ll face deductibility limits. In these cases, the IRS allows you to deduct the smaller of interest on a $100,000 loan or your home's value less the amount of your existing mortgage.