If you live in Utah and have a mortgage, you may be wondering, “what percentage of mortgage interest is deductible?”
Fortunately, we’ve got an answer. Keep reading to learn more.
What is a Mortgage Interest Deduction?
A mortgage interest deduction is a credit you can receive from your mortgage interest each year, up to $1,000. For some people, it’s the only reason why they get a mortgage, and it’s what keeps them in debt by requiring monthly payments to be made. The deduction can’t be subtracted from your income. Just like tax time, this is a complicated subject, and there are many intricacies.
Calculating the Percentage of Mortgage Interest
According to Bankrate, you can deduct your mortgage interest on your federal income tax return, but you can only deduct the interest on the first $750,000 of your mortgage balance. For example, if you purchased a house for $400,000, and your loan balance is $500,000, you can only deduct the interest on the first $250,000. The Tax Cuts and Jobs Act did away with the state and local tax deduction, which affected more than 1 million Utah taxpayers. Instead, the new tax reform plan allows you to deduct the amount of mortgage interest you paid on your home as an itemized deduction.
How to Claim Mortgage Interest Deduction
For you to deduct mortgage interest, you must be a US citizen. You must be at least 18 years old. You must have a home loan with a principal and interest amount of at least $1,000,000. The principal and interest can’t exceed $500,000. If you are married, you may file a joint return, and you are not required to claim any deductions for yourself. However, the same rules do not apply if you file separately. You may deduct the interest for both your primary and second homes on a one-time basis. The one-time provision only applies to newly purchased homes. If you are a homeowner already, the only difference between your primary and second home is the principal and interest must be greater than $750,000, not greater than $1,000,000.
In general, there are no rules for mortgage interest, property tax, and even mileage. However, you can deduct these deductions on your federal return if they exceed the number of deductions that you are allowed. If you can’t deduct the amount, you should still write the expense off as a charitable deduction.
Contact Utah Sell Now
Now that you know what percentage of mortgage interest is deductible, if you’d like to sell a home with a mortgage, contact the experts at Utah Sell Now today. We buy homes in the Salt Lake City, Utah, area in any condition fast and in cash so you don’t have to go through the hassle of staging and showing your home, or paying a realtor. Call us for your no-obligation written offer, and you could have money in hand for your home in as little as seven days.