How will owning a home change my tax filing (Mich.)?
This year for the first time I'm a home owner with a mortgage going into tax prep season. Every year in the past I've filed without any sort of homeownership because I was always renting. Last April I bought a house and have been paying the escrow which covers both the mortgage and the local taxes.
How will this affect my federal and state (Michigan) tax filing? What sorts of paperwork should I expect to receive from various sources and what sorts of questions should I expect to cover all that when I file? I always e-file online so I want to be sure the site I use doesn't skip anything having to do with my mortgage, interest paid, and taxes paid.
- Bostonian In MOLv 76 years agoFavorite Answer
Mortgage interest and property taxes are deductible. If your total itemized deductions exceed your standard deduction ($6,100 for a single taxpayer under age 65 for 2013) you get a small tax savings on the excess. For example, if your total deductions are $7,100 and you're in the 25% bracket, you'll save no more than $250. (I don't have MI data handy, but the maximum savings would be much smaller due to much lower income tax rates, probably $50 at most.)
You'll receive a Form 1098 from the mortgage servicing company that shows how much was paid for interest and property taxes in 2013. You can add prepaid interest, aka points, to the amount on the 1098 if it's not stated there but you have proof from your HUD-1 settlement sheet. Alternatively you can amortize points over the life of the loan. You might consider that if you get no benefit from itemizing in the first year (common) but are close to the standard deduction amount.
You can also deduct mortgage insurance premiums, commonly called MIP, as well. If MIP was rolled into the loan or paid as a single payment at closing (common on FHA loans) you must amortize it over 84 months.
With today's low mortgage interest rates it's not unusual to get no tax benefit at all from home ownership.
- 6 years ago
If you paid enough interest and taxes, you can itemize deductions. Most tax programs will ask and then use the higher of itemized/standard deductions.
You will get a 1098 form the mortgage company showing interest paid, and usually also a statement showing taxes paid as well.
- R KLv 76 years ago
all the interest and points you paid on the mortgage are a deduction, as well as the property tax.
- troLv 76 years ago
you may be able to use the mortgage interest you paid and the property taxes on the property on your Sch A
this is if you are able to exceed your standard deduction with what you can claim in the sch A
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- Max HooplaLv 76 years ago
It depends on how much you deductible interest, property tax and other deductions are. In my case it's nothing, in yours it may be a lot.