Today you will hear about points and PMI (kinda catchy, isn’t it?) Points are loan origination fees that are a percentage of your loan and can be fully deductible on the purchase of your primary residence or a second vacation home in the year of purchase. Certain requirements have to be met. Points on a refinance are deductible over the life of the new loan. Here is an article by The Mortgage Professor about points:http://www.mtgprofessor.com/A%20-%20Points/are_points_deductible.htmPMI stands for Private Mortgage Insurance and is a requirement on a loan if the taxpayer put less than 20% down on a purchase of a house or has less than 20% equity in a house in a refinance. PMI can be deductible but there are limitations of income. Here is an article by Kay Bell at Bankrate.com:http://www.bankrate.com/finance/taxes/deducting-private-mortgage-insurance.aspxAs usual, if you have any questions, call me at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.The next three blogs will talk about investment, business and rental interest.You can count on us to count for you!
Brian’s Tax Musings
If you have a mortgage, you probably have a mortgage interest deduction. Your deduction is based on your aquisition indebtedness (the amount you borrowed when you originally bought the house less payments made). This could be different from your actual loan if you refinanced and took money out of the house. You are entitled to deduct interest on the first $1,000,000 of aquisition indebtedness, which must be invested in the house, and the first $100,000 of home equity indebtedness, which can be used for any purpose (buy a car, TV, whatever). Here are two articles on aquisition indebtedness and home equity indebtedness from Mortgage Guide 101 to read (especially if you want your head to explode):http://www.mortgageguide101.com/acquisition-indebtedness.aspxhttp://www.mortgageguide101.com/equity-indebtedness.aspxI was going to talk about points next, but I need a day to recover from this, so I will talk about them tomorrow. Call me with questions at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.You can count on us to count for you!
Brian’s Tax Musings
Personal property taxes are deductible if you itemize deductions. You pay personal property taxes on cars and trucks, motorcycles, airplanes and boats. Usually they each have a personal property tax portion and a license portion (but not always.) You need to check your bill to see how much is deductible.If you deduct auto expenses on schedule C and take the standard mileage deduction, you can also take the business portion of personal property tax on the car or truck as an addition deduction. This will help reduce self-employment taxes and may allow you to get a few more itemized deductions that are reduced by a percentage of AGI.If you have any questions, please call me at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.Monday I wiil talk about mortgage interest and points.You can count on us to count for you!