Allyson Ebert

Mortgage Banker

(714) 460-4379  Office

(714) 210-7779  Fax

(949)945-8578 Cell

aebert@mhmb.com

 Write-offs are the governments way of rewarding  taxpayers when they’ve  done something the        government likes.  And to judge by the write-offs, the government likes it when people borrow money to buy a house.  There are write-offs aplenty, Many of which people often forget.  Make sure you are taking advantage of every break the IRS will give.  Here are a few people forget.

Points:

According to the IRS, Origination fees charged as points must be paid for the use of money, (for example, to obtain a lower interest rate) in order to be tax deductible. Origination fees that constitute a “service fee” are not tax deductible.  The question must be asked, “ Does the fee apply to the use of money, or is it a service charge?”

Discount points are paid to secure a lower interest rate.  IRS Publication 936 lists a general rule that states,

“You generally cannot deduct the full amount of points in the year paid.  Because they are prepaid interest, you

generally must deduct them over the life (term) of the mortgage.”  How ever, there are conditions which , if met , make discount points tax deductible in the year they are paid. 

See:  http://www.irs.gov/publications/p936/ar02.html#d0e942

Pre-payment penalties:

Unforeseen circumstance often cause borrowers to pull out of their mortgages sooner than expected.  Fortunately pre-payment penalties are tax deductible, which helps ease the pain.

Pro-rated mortgage interest:

Depending on when in the month the home sale closes, buyer pay either a heft or tiny amount of pro rated mortgage interest for that month, Big or small, they  can write that off.  The Final Closing/Settlement Statement, (known as a HUD-1) will show just how much you’re due.

Home construction loan interest:

As long as the construction period doesn’t last more than two years before they make the new home your “principle residence,” you can write off the interest for that construction loan.

First time buyers credit:

There are currently both state and federal programs available.  Most are aware of the “Federal Program,”  don't forget to apply for the state credit as well.  The 2009 credit was for new construction homes and is a first come first serve program in the state of California.  (They ran out of credit July 1, 2009)They just renewed the buyers credit for homes    purchased between May 1, 2010 to anyone who buys new construction and any first time buyer on existing  homes.

It pays to pay attention — all these write-offs can add up to some serious savings when tax time comes around!

                                                            Do you have a tax tip to share? 

                                                           Don’t forget to file by April 15th!

                                          Mission Hills Mortgage Bankers is a division of Gateway Business Bank, 

To remove your name from our mailing list, please click here.

Questions or comments? E-mail us at aebert@mhmb.com or call 949-945-8578