Are you currently in the market for a new home, or are you a first-time home buyer? In this video, I'm going to go over the top tax deductions related to homeownership under the new tax law. Hey guys, Steve Lee here from Simply Tax. Congratulations if you purchased your first home or are in the market for your first home purchase. In this video, I'm going to go over the top tax deductions related to homeownership. Please don't forget to hit the subscribe button below, as I'm going to continue to post great content related to any changes in the tax law related to being a homeowner or any tax saving strategies that apply to you or your family. So, if you took out a mortgage to purchase your home, your monthly mortgage payment will typically consist of the following three items: principal, mortgage interest, and real estate taxes placed into escrow. Out of these three items, you can only deduct two of them, which are mortgage interest and real estate taxes paid, under the new tax law. From mortgages taken out after December 15, 2017, you can deduct the mortgage interest paid, up to $750,000. For example, if your total mortgage on your home is $700,000 or less, you can deduct 100% of the mortgage interest paid. But let's say you took out a mortgage greater than $750,000, let's say a million dollar mortgage, then you can only deduct 75% of the mortgage interest paid on that million-dollar home. Remember, this new tax law only relates to primary and secondary residences. It does not relate to rental properties. So, for all you landlords out there, you can continue to deduct 100% of the mortgage interest paid on all your rental properties. A second tax deduction relates to real estate taxes paid. Most...
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How does mortgage tax deduction work Form: What You Should Know
The Bottom Line on Mortgages If you are refinancing your home right now and are paying your mortgage in full, you may not owe any tax on that money because you will probably qualify for the home mortgage deduction. If you plan on purchasing a new home, take on some new debt, pay tax, and get a refund, it could be best to take the mortgage interest deduction now and save any interest you pay in the future. It may be worth considering taking a mortgage interest deduction over the course of your house purchase. Keep your eye on your mortgage payment to see how the additional tax breaks will affect your payments throughout the life of your mortgage.
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