Information About Mortgage Tax Benefits
- One of the most important benefits of buying a home and having a mortgage is the mortgage interest expense income tax deduction. For most borrowers, the mortgage tax deduction provides a significant, positive financial impact and is an important factor in determining how much home they can afford. The interest expense tax benefit helps to offset property taxes, homeowners insurance and other monthly housing expenses you pay when you own a home.
- According to federal tax code, mortgage interest, mortgage insurance and property tax expenses are deductible against a borrower’s gross income. The lower you’re reported gross income, the less tax you pay. To be clear, your mortgage interest expense is not directly deducted from taxes owed on a dollar-for-dollar basis, but rather reduces the gross income figure that is used to determine the amount of federal tax that you owe. Additionally, you do not receive any money directly from the federal government as the result of the mortgage tax deduction but you do pay less in federal taxes, which in turn offsets your total monthly expense. So instead of receiving a monthly check from the government for your mortgage interest tax benefit, you pay the government less taxes.
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515 Lowell Street Suite 1 Peabody, MA 01960