Tax returns and refinanced homes - what to watch for
Question: We’re just preparing out tax returns and are taking into consideration that we refinanced our home last year. What should we be watching out for?
Answer: When filing taxes each year, many homeowners tend to overlook a number of possible deductions that they may have either forgotten about or are unaware of. These deductions can add up to significant savings on taxes, aside from the savings on mortgage interest that most homeowners are already aware of.
One of these possible deductions is the amortized points on a refinanced mortgage. Any time a homeowner refinances, the points are amortized, or spread over the life of the loan. The points paid each year are typically the only points that can be deducted. But if a homeowner refinances a mortgage for the second or third time, any remaining amortized points that haven't previously been deducted can be deducted in full during that year's taxes.
These unpaid points are often forgotten, but they can help homeowners save a considerable amount of money, according to Harvey Berger, associate partner at Grant Thornton. Ó1999 Information.Inc.
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