• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick A silver lining from high mortgage interest rates: Bigger deductions on this year’s taxes
Editor's Pick

A silver lining from high mortgage interest rates: Bigger deductions on this year’s taxes

by January 28, 2024
by January 28, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Home mortgage rates have soared during the economic recovery from the pandemic, but the swelling ranks of homeowners facing steep interest payments this year may find some relief based on how they file their tax returns.

Thanks to the mortgage interest deduction, filers who choose to itemize their tax returns rather than take the standard deduction can deduct the entirety of their home interest payments in addition to taking other write-offs.

Some tax experts say that’s likely to be a more attractive option to more tax filers this season.

Atiya Brown, a certified public accountant and owner of The Savvy Accountant, said mortgage holders with with higher interest rate payments are more likely to get the most favorable returns by itemizing them, rather than taking the standard deduction, a comparison that she shows her clients.

“I definitely think that a lot more people are going to see the difference,” Brown said.

She added that she expects more filers will seek professional help this season. Choosing to itemize mortgage interest means having to itemize other sections of the tax returns as well, Brown said, which can add enough complexity to require an accountant.

The standard deduction is a specific dollar amount set each year by the IRS that filers can use to reduce their tax burden. It’s designed to save filers the time and resources often necessary to itemize deductions.

For the 2023 tax year, the standard deduction is $13,850 for single filers and $27,700 for married taxpayers filing jointly. But many homeowners could find the mortgage interest deduction a better option.

A single filer paying a 4% rate on a $500,000 home loan — equating to monthly interest payments of about $1,667, or $20,000 a year — could thus end up seeing substantial savings.

And many households are paying higher rates.

While mortgage rates have been falling since reaching a post-pandemic high of 7.8% last fall, the 30-year mortgage rate is currently still hovering above 6%.

Until the Tax Cuts and Jobs Act, passed by Republicans in 2017, the mortgage interest deduction could be applied to the first $1 million of the loan for a single flier and $500,000 for married couples filing separately.

Today, it only applies to the first $750,000 of a typical mortgage loan for single filers, or $375,000 for married couples filing separately. The change was meant to allow more people to take the standard deduction, which the TCJA also increased.

But the relevant portion of the law expires in 2025 and would cause the limit to go back up to $1 million — and there is no sign yet that Congress will keep the current limit, according to the Bipartisan Policy Center.

Kenneth Chavis IV, a senior wealth adviser at Versant Capital Management, said that while many new homeowners may not be used to itemizing their deductions, they are now more likely than ever to reap tax benefits from doing so, assuming many are among those living with higher mortgage interest payments.

“Interest rates have skyrocketed — but more people will be eligible for (more) mortgage interest deduction,” especially newer homebuyers, Chavis said.

Principal payments and down payments cannot be deducted on your taxes. Nor can closing costs, appraisal fees or insurance.

Mortgages on rental properties also cannot be deducted if they are not the filer’s primary residence.

And only the portion of a home used for living can be counted toward the deduction. In other words, you cannot double-dip if you plan to take any home office tax write-offs.

However, both late payment and pre-payment penalties are in many cases deductible.

This post appeared first on NBC NEWS
You Might Also Like
  • Lordstown Motors files for bankruptcy, sues Foxconn
  • U.S. stocks close higher, bouncing back from deep sell-off
  • McDonald’s $5 value meal is coming in June — and staying for just a month
  • Improving the Experience of Both Employees and Customers
Share
0
FacebookTwitterPinterestWhatsapp

previous post
More countries cut funding to UN agency after staffers accused of participating in Oct. 7 Hamas attack
next post
Lone House Republican supporting Nikki Haley after NH and Iowa losses makes her case for 2024

You may also like

U.S. judge finds Google holds illegal online ad tech monopolies

April 18, 2025

Home price growth is back at pre-pandemic levels. Here’s what...

March 27, 2024

Zyn-maker Philip Morris announces $600 million Colorado facility to ramp...

July 17, 2024

Netflix announces ‘broad rollout’ of password-sharing crackdown in U.S.

April 19, 2023

Regulators caught Wells Fargo, other banks in probe over mortgage...

December 13, 2023

Trump Media stock erases all gains since it began trading...

April 11, 2024

Stock market has worst day since 2022 as Tesla, Google...

July 25, 2024

Extreme heat makes flying harder. Airlines and airports say they...

July 29, 2024

Prepare to flick off your incandescent bulbs for good under...

August 4, 2023

Mortgage rates are slipping after a rapid rise

November 17, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    How a UAW strike could affect...

    September 10, 2023

    Ulta Beauty CEO outlines plans to...

    June 2, 2024

    Chase Bank is referring check fraud...

    September 9, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here