Access Business Technologies hosts Mortgage Servicing Software for some of the largest Credit Unions in the country. It's "Tax Time" again and we don't want your members to miss out on their mortgage deductions. Some tax deductions to consider are those relating to the purchase of a home, refinancing an existing loan, an existing
Purchasing of a home. At closing you will receive a HUD-1 statement, also referred to as the closing statement. This statement should show all the money that you have spent in relation to the purchase of the home and the allocation of the money spent. In most cases, there will be a small amount of property tax that you have paid, this is a tax deductible expense. You will also see mortgage loan origination fees and Points on the HUD-1. These are also tax deductible expenses. What is a mortgage loan origination fee? This fee is the administrative costs associated with getting the loan, such as fees paid to attorneys, notary public fees, and the preparation costs. Are you wondering what a point is? Points are the upfront fees that equal one percent of the loan. Points can lower your mortgage interest rate. Remember, don't miss out on your mortgage deductions this year.
Refinancing an existing loan. When you refinance, points paid can be deducted over the life of the loan. In this situation, you should take into consideration, new points, old points, and early payoff. What are new points? New points are those points that have been incurred for the new loan. Old points are those that are left over from the old loan in the year that you convert to the new loan. What about an early payoff you ask? If you decide to pay your mortgage loan off early, you can deduct any remaining points in the year that you pay the loan off.
Existing Mortgage. Deductible real estate taxes are generally any state, local or foreign taxes on real property. These taxes must be charged uniformly against all property in the jurisdiction and must be based on the assessed value. You can also deduct the mortgage interest and property taxes that you paid for the year. Mortgage interest is reported to you on Form 1098. If your property taxes are paid through escrow, the Form 1098 should show how much you paid for property taxes as well. If the form doesn't show the amount of property taxes paid, you can refer to your property tax statements that you receive twice a year.
Short Sale. If you receive a 1099-C (Cancellation of Debt) as the result of a short sale and
2007, you can exclude the canceled amount from your taxable income. You can refer to the following IRS webpage for more information: http://www.irs.gov/individuals/article/0,,id=179414,00.html.
Sale of primary residence under normal circumstances. If you decided to sell your primary residence under normal circumstances, you can exclude a gain on the sale price of up to to$250,000 for single tax filers, and $500,000 for married filers who file jointly.
Refer to IRS Publication 523 for more information regarding the gain exclusion on the sale of your primary residence. Capital gain exclusions are only applicable to the sale of your primary residence providing that you meet the ownership and use tests. Again, don't miss out on your tax deductions this year.