![]() ![]() Rent you receive from tenants is taxable income, and you must report it on your tax return. The rules are different when you're refinancing the mortgage on a property you use to generate rental income. These costs are generally not deductible in a mortgage refinance if they're for your residence. These closing costs can add up to hundreds or thousands of dollars and may include such things as: A number of fees and charges may be applied at settlement. You "settle" or "close" your mortgage refinancing when you sign all the paperwork to officially take out the new loan and pay off the old one. This is different from points paid when you first bought the home points on an original purchase can often be deducted in full in the year they're paid. If you refinanced to a 15-year mortgage, for example, then you'd deduct a portion of the points each year for 15 years. Points paid as part of a mortgage refinance usually must be deducted over the life of the loan. Points sometimes go by other names, including: One point equals 1% of the loan amount, so if you paid 2 points on a $100,000 loan, for example, you would have paid $2,000. Points are prepaid interest you pay them upfront to get a lower interest rate during the period when you're repaying the loan. If you paid "points" when you refinanced your mortgage, you may be able to deduct them. At year's end, your mortgage lender sends you a statement, called Form 1098, explaining how much you paid in interest during the year. ![]() ![]() When you use TurboTax, it helps you decide which option-itemizing or the standard deduction-will save you more money. (Learn more about itemizing with " What Are Itemized Tax Deductions?") The alternative to itemizing is to take a standard tax deduction, which is a set amount you can claim regardless of your actual expenses. You "itemize" deductions on your tax return, meaning you list all of your deductible expenses, add them up, and then deduct the total amount from your income.This means your home serves as collateral for the loan if you fail to make your payments, the lender can foreclose on the home The loan is for your primary residence or a second home that you do not rent out.Generally, mortgage interest is tax deductible, meaning you can subtract it from your income, if the following applies: With any mortgage-original or refinanced-the biggest tax deduction is usually the interest you pay on the loan. ![]()
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