Unlocking Tax Benefits- How to Legally Claim Mortgage Interest on Your 2018 Taxes
Can you claim mortgage interest in 2018?
Mortgage interest is a significant expense for homeowners, and many individuals are curious about whether they can claim this expense on their taxes. In 2018, the ability to claim mortgage interest depends on various factors, including the type of mortgage, the purpose of the mortgage, and the individual’s tax situation. This article will explore the eligibility criteria and provide guidance on how to claim mortgage interest in 2018.
Eligibility for Claiming Mortgage Interest in 2018
To claim mortgage interest in 2018, you must meet certain criteria:
1. Ownership of a Home: You must own a primary or secondary residence to claim mortgage interest. This includes single-family homes, townhouses, condominiums, and cooperative apartments.
2. Mortgage Debt: The mortgage debt must be used to buy, build, or substantially improve the home you own. It’s important to note that refinancing an existing mortgage does not qualify for mortgage interest deduction.
3. Tax Filing Status: You must file a federal income tax return to claim mortgage interest. However, the deduction is not available to married individuals filing separately.
4. Home Acquisition Date: The mortgage must have been taken out on or before December 15, 2017, to claim the interest for the 2018 tax year.
Calculating Mortgage Interest for Tax Deduction
To claim mortgage interest, you need to determine the amount of interest you paid during the tax year. This information is typically found on your mortgage statement or the Form 1098 you receive from your lender. Here’s how to calculate the mortgage interest for your tax deduction:
1. Identify the principal amount of the mortgage: This is the original loan amount, not including any additional fees or points.
2. Determine the interest paid: Look for the “Total Interest Paid” or “Total Interest” line on your mortgage statement or Form 1098.
3. Calculate the deduction: Multiply the interest paid by the lesser of the following amounts:
a. The adjusted cost basis of the home, which is the purchase price minus any improvements or depreciation.
b. $750,000 for married couples filing jointly, $375,000 for married individuals filing separately, and $500,000 for single filers.
Claiming Mortgage Interest on Your Tax Return
To claim mortgage interest on your 2018 tax return, follow these steps:
1. Complete Schedule A (Form 1040) to itemize deductions.
2. Enter the mortgage interest amount on line 10 of Schedule A.
3. If you’re married and filing separately, you may not be eligible for the mortgage interest deduction.
4. Attach Schedule A to your Form 1040 and file your tax return.
Conclusion
In 2018, homeowners who meet the eligibility criteria can claim mortgage interest on their tax returns. By following the guidelines outlined in this article, you can ensure that you accurately calculate and claim your mortgage interest deduction. However, it’s always a good idea to consult with a tax professional or financial advisor to ensure you’re maximizing your tax benefits.
