When you refinance a mortgage, you're really just taking out a new loan and using the money to pay off your existing home loan. Generally, the same tax deductions are available when you're refinancing a mortgage as when you're taking out a new mortgage to buy a home. We’ll guide you through all the available tax breaks to help save you even more. Here are some things to know about home refinancing and your taxes.
1. You need to include both of your 1098 forms on your return
You'll receive two 1098 forms this year, and you’ll need to enter both of them when completing your return. Start with the one from your original loan, and then the one from your refinance. Don't add them together, and tell us which one was paid off. We'll guide you through entering all of your 1098 information as you go.
2. Rental property refinancing works a little differently
The rules are different if you refinance the mortgage on a rental property. Rent you receive from tenants is taxable income, and it has to be reported. But the money you spend to generate that income can usually be deducted. So, not only can you deduct the interest and points paid on a mortgage on a rental property, but also all closing costs and fees. Tell us about your property and we’ll guide you through taking all the deductions you qualify for.