How does mortgage interest work when dealing with tax returns?
How does a mortgage work when dealing with tax returns?
Do we get back all the interest that we pay off or a certain percentage?
Please provide backup in your answer.
How does a mortgage work when dealing with tax returns?
Do we get back all the interest that we pay off or a certain percentage?
Please provide backup in your answer.
http://www.irs.gov/publications/p936/ar02.html
At the end of the year, you will receive a statement from your mortgage company showing the amount of interest you payed on your mortgage for the tax year. This is a deduction from, or a reduction of, your adjusted gross income. It’s not a tax credit. For example, if you made $50K, and your mortgage interest was $5,000 for the year, your taxable income would then be $45K instead of $50K. If your tax rate is 10%, your tax liability, or the amount you owe, would be reduced by $500. You will have to file a 1040 form with a schedule A.