E Mortgage Blog

3rd Quarter Tax Planning - What we do besides write mortgages!


So you and your clients reap the tax deductible rewards of home ownership

Agents and Brokers you are welcome to copy this article and use it in your offices to give to your clients.

Considering we are entering deep into the year away from tax season...If you’ve purchased, sold or refinanced your home in the past year, now in the third quarter tax season is the best time to think about reaping the benefits of being a homeowner! Take advantage of some of these tax breaks today and you could enjoy a bigger return
in April!

Mortgage Interest. For most homeowners, the bulk of your mortgage payment is going towards interest – and that’s a big tax break for you! The mortgage interest on your primary residence is fully tax deductible, unless, of course your loan is more than $1 million.

You can also deduct late payment charges as home mortgage interest as long as the payment was not late due to a specific service received in connection with your home loan. Also, if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).

Property Taxes. Your property taxes - the annual taxes based on the assessed value of your property – can also be deducted. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners' insurance went into an escrow account when you closed on your mortgage. You can also review your cancelled checks to determine your total real estate tax deduction.

Loan Points. Any points you paid to get a better rate on a home loan, are tax deductible in the year you made the purchase as long as:

• The loan is secured by your primary residence and it was used to buy, improve or build the home.
• Paying points is an established business practice in your area;
• The points are computed as a percentage of the loan principal;
• The points are clearly defined on the buyer's settlement statement; and
• You put cash into your home purchase in an amount at least equal to the points you were charged.

Loan Points on a Refi. The points you paid on a refinanced loan may also be tax deducible, however in most cases, the points must be deducted over the life of the new loan. So if you paid $2,000 in points to refinance a 30-year mortgage, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan.

Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan, when combined with your first mortgage amount, increases the debt on your home to an amount more than the property's actual value, you’ll face deductibility limits. In these cases, the IRS allows you to deduct the smaller of interest on a $100,000 loan or your home's value less the amount of your existing mortgage.

Our Preffered Tax Accountant is below please visit them for more tax planning tips or to start planning for 2010 now its never too late!

Visit www.ashtongroup.net or www.servicebusinesssolutions.com



Premier Mortgage Store 1605B Prosperity Farms Road Lake Park, FL 33403
Phone: 561-210-3000 Fax: 561-624-1764

www.premiermortgagestore.com

Rate Lock Advisory - Monday Aug. 30th



Monday's bond market has opened in positive territory after concerns about the economy and this week's have led to a negative open in stocks. The Dow is currently down 49 points while the Nasdaq has lost 11 points. The bond market is currently up 14/32, but we will likely see little change in this morning's mortgage rates do to weakness late Friday.

Today's only relevant economic data was July's Personal Income and Outlays. It showed that personal income rose 0.2% while spending rose 0.4% last month. The income reading matched forecasts, but the increase in spending was a little higher than what analysts were expecting. Therefore, this data can be considered neutral to slightly negative for bonds and mortgage rates.

Tomorrow has two releases scheduled that may affect mortgage rates. The first is August's Consumer Confidence Index from the Conference Board. This index measures consumer sentiment about their personal financial situations, giving us a measurement of consumer willingness to spend. That is important because consumer spending makes up two thirds of the U.S. economy. A decline in confidence would indicate that surveyed consumers probably will not make a large purchase in the immediate future. That sign of economic weakness should drive bond prices higher, leading to lower mortgage rates tomorrow morning. The 10:00 AM ET release is expected to show a reading of 50.0, which would be a small decline from July's 50.4. The lower the reading, the better the news for bonds and mortgage pricing.

Also tomorrow is the release of the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It will be interesting to see some of the Fed member's views on the economy and inflation and if they will hint what the Fed's next move may be. But this is one of those events that can cause significant movement in rates after its release or be a non-factor. I suspect that this particular release will cause a little movement in bond prices, but not enough to significantly affect mortgage pricing.

Overall, I expect to see the most movement in rates Friday, but tomorrow and Wednesday should also be fairly active. Also worth mentioning though is the fact that next Monday is Labor Day so all markets will be closed. The bond market will not close early this Friday, but many traders may head home for the long weekend after Friday's data is posted. This means that trading will likely be thin Friday afternoon even though the markets will still be open. This could lead to additional volatility in rates as traders prepare for the long weekend, so please be careful this week if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2010

Premier Mortgage Ft Lauderdale

Premier Mortgage Store Naples

Premier Mortgage Store Florida

Premier Mortgage Boca Raton

FHA Mortgage Store

VA Mortgage Store

USDA Mortgage Store