Las Vegas Mortgage Call Casey Moseman 702-271-1274

Personal and Professional Service to Get the Best Loan for you

The IRS & The Mortgage Interest Deduction – It’s Complicated

The GAO (Government Accountability Office) has issued a critical report of how the IRS handles enforcement of the mortgage interest deduction rules.  The GAO says that the rules are more complicated than many people understand, and that the IRS doesn't do a good job of enforcing them.  The good news for the government coffers is that the report indicated that errors to the negative were probably balanced by those in the other direction, so a wash as far as dollar impact.

Let's not even talk about how they expect us and our accountants to deal with it if the IRS can't either.  To be fair, the blame is placed on lack of resources and manpower.  The general belief is that all mortgage interest is deductible, but reality is quite a bit different.  Without getting into all of the many pages of rules, here are some highlights:

  • Can only be claimed on mortgages under $1 million
  • Can't be increased in a refinance, unless the proceeds are used to improve the home
  • Buy-down points, as well as origination fees are deductible in the year paid
  • Lender fees, PMI (Private Mortgage Insurance) premiums and other closing fees are not deductible
  • Home equity loans are limited to $100,000 for the deduction

Those are some of the high points, so be sure to check with your accounting professional before making any decisions about mortgages if tax issues are important.  And unfortunately, the IRS can afford to make mistakes in regards to mortgage interest deduction issues, while we surely cannot.

<
%d bloggers like this: