Deduction of Refinance Points
Any points that you pay in the refinancing of your residence are tax deductible over the length of the loan in question. The deduction is allowable only if the residence is your primary home and the new mortgage replaces a previous one and/or is used to improve the residence. To the extent that money is taken out to pay off credit cards and non-residence costs, the points may not be used as a tax deduction.
Big Deductions By Refinancing Twice
If you refinanced your primary residence twice during 2004, you may be in for a very nice surprise. A significant tax deduction can be created when you refinance twice in one year. If you refinance a mortgage, you accelerate the deductible amount of points from the first mortgage and may claim the points from the first mortgage all at once.
As an example, assume that I refinanced my home in January 2004 and paid $3,000 in points. Interest rates continued to drop through 2004 and I then decided to refinance again in August. Because I paid off the original loan with the refinance, I am able to accelerate the value of the points of the January loan.
So, what tax deductions have I created for my 2004 filing period? Initially, I am going to deduct a percentage of the points off of my latest refinance. The deduction will amount to the total amount of points paid divided by the total months of the loan. This will not be a big deduction, but every little bit helps.
In addition to this amount, however, I will also deduct the full $3,000 in points that I paid on my January 2004 refinance! I am able to claim this deduction because I "accelerated" the deductibility of the points by paying of January mortgage with the August refinance.
By refinancing twice, I get a lower interest rate and a healthy tax deduction. Ah, the value of owning a home.
Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
Lincoln Stretch rentals Alsip ..You've been feeling uneasy (perhaps even guilty) because you've failed... Read More
We all love to criticize the IRS, don't we? And... Read More
Background issues of access to recordsTo assess the records at... Read More
Import duties continue to be significant elements in the cost... Read More
One way to maximize your business profits is by reducing... Read More
Recently, I stumbled across a concept that could change your... Read More
Choosing the right tax preparer for your business is a... Read More
The IRS has obtained civil injunctions against more than 100... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
As tax time approaches, many home-based business owners begin completing... Read More
NOTE: This is the first in a series of 5... Read More
Yes, the tax season is upon with the first filing... Read More
"Deducting Meals and Entertainment"O.K. You've been working really hard on... Read More
As everyone in the U.S. knows, we have just passed... Read More
Marketing is a necessary expense in running practically any business... Read More
Reservists called to active duty and enlistees in the armed... Read More
Estate taxes. It's not enough to simply know they exist,... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
The powers of Congress, and the limitations set upon those... Read More
April 15 - The most dreaded day of the year... Read More
Anyone who is closely related to an accountant knows that... Read More
As a sole proprietor, it's wise to familiarize yourself with... Read More
Small Businesses Filing Amended Federal Tax Returns to... Read More
According to the IRS, taxpayers underpay their taxes by some... Read More
Does your incorporated business pay alternative minimum tax ["AMT]? If... Read More
Western Springs shuttle limo ..The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More
Whether helping the kids with a down payment on their... Read More
Employers often ask employees to designate the amount of tax... Read More
The knock on the door from a Tax Inspector is... Read More
Someone once said, 'the best way to calculate your taxes... Read More
Excerpted from the new book, "How to Do Space Age... Read More
With the massive losses caused by Katrina, the economy of... Read More
Each year, the IRS lists various scams taxpayers get caught... Read More
Just image, you are a small manufacturing company, business has... Read More
In the latest Star Wars episode, the evil empire executes... Read More
In the largest criminal tax case ever filed, KMPG has... Read More
Millions of people file tax return extensions every year. The... Read More
It's a moment every person dreads. You pick up the... Read More
Beware of advertisements that claim to settle tax debts for... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
Do you realize that some tax forms ask you to... Read More
Recently, I stumbled across a concept that could change your... Read More
1812The first attempt to impose an income tax on America... Read More
As tax time approaches, many home-based business owners begin completing... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
One of the most important, but least understood or appreciated... Read More
Six Urban Myths ? Taxation"I am proud to be paying... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More
As we enter mid-March, taxpayers begin to become very interested... Read More
Tax |