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Put Your Mortgage to Work for You at Tax Time

It’s that time of year again. Not March Madness, but income tax filing season.  If you own a home, make sure you take the time to organize your documents to maximize your tax deductions.  Proper planning and organization will help minimize your taxable income.

There are many tax benefits to home ownership. The three main deductable items are:  Mortgage interest, Property taxes, and Mortgage insurance. 

The important documents that you’ll need for preparing your tax returns and maximizing those deductions are Form  1098 and Hud-1. 

The Form 1098 was sent to you by your mortgage company. This will list the mortgage interest and mortgage insurance you paid during the past year.  Remember if you refinanced during the past year you will then see multiple Form 1098s, one for each loan.

If you bought or refinanced your home in the past year, you’ll also need your Settlement Statement (HUD-1) from your closing.  This is important because IRS rules only make a mortgage company send a 1098 for $600 or greater.  So if you have interest or deductible fees on your HUD-1 totaling less than $600 you will not be sent a 1098 and will need your HUD-1 as your proof.  Finally, don’t forget to reference your property tax bills from the past year so you can include the correct amount on your tax returns.

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February 24, 2011 - Posted by | Uncategorized | , ,

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