2011/03/03

How does the IRS figure out your tax refund for your mortgage interest? Is it a percentage? | How To Figure Out Your Tax Refund

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Question by Jim B: How does the IRS figure out your tax refund for your home loan interest? Is it a proportion?
i.e. How much can or ought to you deduct??? Or would it be more useful to spend your property off ASAP??

How To Figure Out Your Tax Refund

Greatest solution:

Answer by rtfm
Your home loan interest is one of the deductions you checklist on your Schedule A.

If all of your deductions extra jointly amount to a lot more than the “regular deduction”, then you get to subtract the complete of your deductions from your cash flow prior to you glimpse up on the tax table how considerably your taxes are.

So the volume that you preserve on your taxes by itemizing deductions isn’t truly a percentage, it really is variable, depending on how a lot all your deductions add up to and how significantly your revenue is in the first place.

No 1 single answer applies. Sorry.

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Tags: home loan interest, itemizing deductions, mortgage interest, Tax Refunds.

Filed under How To Figure Out Your Tax Refund by taxrefunds on Mar 3rd, 2011. Comment. #

Comments on How does the IRS figure out your tax refund for your mortgage interest? Is it a percentage? | How To Figure Out Your Tax Refund Leave a Comment

2011/03/03
Reply

src50 @ 8:44 pm #

Depends on your income and other factors. There is no “percentage.” You can deduct interest and property taxes from your taxable income IF you itemize deductions.

Reply

Baccheus @ 9:16 pm #

You deduct the interest you pay from your income. So, if you are in the 15% bracket, your tax obligation is reduced by 15% of the interest you pay.

It is advantageous to pay the home off quicker if you can do better with the money you pay. If you pay off quicker you save on interest, a lot more than you lose on taxes. In general it is usually financially optimal to buy as much of a home as you can afford — which means buying a home you cannot afford to pay off quickly. It is riskier, but you are likely to gain appreciation on a home worth 5 times your investment. If you buy a $ 200K home with a 20% down and it appreciates by 5% in a year, you now have a home worth $ 210K and still owe about $ 40K, so you gained $ 10K on a $ 40K investment — that’s 25% in one year. There are lots of variables but the way most people gain wealth on homes is by borrowing as much as possible and enjoying appreciation.

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