topic mortgage interest deduction in Deductions & credits

mortgage interest deduction

jayanglada — Wed, 29 Jul 2020 00:49:42 GMT

The individual mortgage interest deductions on two loans with combined interest of $17,279 have not transferred to Schedule A

I have filled out the step by step in several ways and was told "congrats you get a tax break". I had 1098s for two mortgages in 2019, the second paying off the first. There has been no withdrawal of principal and the balance of $515,000 has not changed through 4 refinancings since 2008. There have been no points paid.

Re: mortgage interest deduction

xmasbaby0 — Wed, 29 Jul 2020 04:06:54 GMT

Do all of your itemized deductions add up to more than your standard deduction? if they do not , then nothing will go to Schedule A.

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income. It is not a refund.

2019 Standard Deduction Amounts

Single $12,200 (+ $1650 65 or older)

Married Filing Separate $12,200 (+ $1300 if 65 or older)

Married Filing Jointly $24,400 (+ $1300 for each spouse 65 or older)

Head of Household $18,350 (+ $1650 for 65 or older)

Look on line 9 of your 2019 Form 1040 to see your itemized/standard deduction amount

Re: mortgage interest deduction

Carl — Thu, 30 Jul 2020 00:24:37 GMT

I had 1098s for two mortgages in 2019, the second paying off the first.

So basically, you refinanced a property in 2019. If you refinanced for more than the outstanding balance on the original loan, then the cash out amount (in excess of the original loan balance) may not be deductible if you did not use the cash out to repair or substantially improve the property securing the loan.

Example:

Original loan balance of $50K. You refinanced the property for $80K. Then $50K of that was used to pay off the original loan leaving you with $30K cash in hand. You did not use that $30K in any way for the property that was refinanced. Therefore you can only claim on the SCH A the interest on the original outstanding loan balance of $50K, which is 84% of the interest on the new loan. The amount of interest you can deduct on that loan will remain at 84% for the life of that new loan.