TAX TIP : Homeowners, Review Your Tax Forms
New tax laws require you to prove how funds are used to qualify for a deduction. This can mean that not all of the interest and points reported on your 1098 statements are tax-deductible.
If you have a mortgage starting on or after Dec. 15, 2017, you can deduct interest on up to $750,000 of the loan (down from $1 million for mortgages initiated before Dec. 15, 2017).
Proceeds from home equity debt that are not used to build, buy, or substantially improve a qualified home are no longer tax-deductible. This includes mortgage or home equity proceeds used to pay for college expenses, debit consolidation, or other purposes.
Mortgage points requires review of settlement statements. Generally, points are deductible in the year they are paid, but they have more restrictions than mortgage interest. If you bought or refinanced a home in 2018, a review of your mortgage settlement statement may be required to ensure proper tax treatment of the cost of your points.
Mortgage insurance premiums are not deductible. Congress did not extend the mortgage insurance premium deduction for 2018.
With these updates to tax law, properly calculating 2018 mortgage deductions is especially important. Call 805-496-2828 for help with 2018 tax preparation.
Tax Tip: Include a note with each 1098 you receive to track what the loan is for.
