During recent weeks, the mortgage interest tax deduction that has been discussed in Washington with regard to saving money, closing loopholes, and avoiding the ‘fiscal cliff’ has created a bit of controversy. While the interest deduction has no bearing on Arizona mortgage rates, it’s a good idea to become familiar with it: what it’s about, how it could save you money, and why losing it can cost you money over time.
I have written previously about this interest deduction and won’t go into the same detail here, but it’s interesting, as an Arizona mortgage broker, that so few homeowners actually take this deduction that they qualify for. Forget about your Arizona mortgage rates for a moment. If you own a home and you pay interest on your mortgage, then you likely qualify to take the tax deduction.
According to the Internal Revenue Services own data reporting? It’s an interesting question and what is even more interesting is that if only a quarter of eligible taxpayers use it would there be such a concern over losing it? After all, would you actually miss something that you didn’t use? Not likely.
Yet, as I said, as an Arizona mortgage broker, I wonder what the reasoning is behind this lack of enthusiasm. If you have the opportunity to save hundreds, perhaps even thousands, of dollars every year on your taxes because you pay a mortgage, then why wouldn’t you? In order to try and figure out the answer, it’s important to understand the demographics.
In fact, 37% of the taxpayers in Maryland take the deduction while less than 15% in North Dakota claim it. Perhaps it’s because people consider this deduction to be more for wealthy individuals, even though it’s available to anyone who has a home loan. In general, the standard tax deduction for married couples filing jointly is $11,900. In several states, such as Virginia, Maryland, California, and Washington, the average mortgage interest deduction is over $12,000 and that’s before any other deductions are listed or charitable contributions calculated in.
What’s more, over 73% of homeowners earning more than $100,000 a year take the deduction while less than 8% of homeowners earning less than $50,000 claim it. Perhaps the tax code confuses the middle class homeowner and they aren’t certain whether they are eligible to take the deduction.
In Arizona, the real estate market has been tough, but it’s finally showing signs of life and there is a great deal of optimism for the future. That being the case, when you consider the benefits of the mortgage interest deduction, it can make the difference between being able to afford the home of your dreams and settling for something else.
While Arizona mortgage rates are not going to be affected by whatever decision is made in Washington with regard to this deduction, if they keep it off the chopping block, make sure you understand how to claim it on your taxes next year. It could save you more than a month or two worth of mortgage payments.
If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to firstname.lastname@example.org or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
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Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.BACK TO LIST