In early March, the Federal Reserve slashed interest rates in an attempt to stabilize the markets hit by Coronavirus.
This has led to a flood of people looking to refinance their cars and homes, hoping to get a better long-term loan. As there’s now an increased level of buying power, the consideration of ‘what will this mean for my taxes?’ is one that gets asked frequently during these times, which is why we decided to put together a quick guide on what you need to know.
With many citing the Mortgage Interest Tax Deduction as a primary driver to purchasing a home, you might be surprised to learn where it stands now, as well as if it’s a good option for you to refinance as well. Here’s what’s going on with it:
The Mortgage Interest Tax Deduction is an itemized deduction on the interest you’ve paid on your home.
What was once considered a worthwhile incentive when it came to buying a home, the mortgage interest tax deduction changed quite a bit in recent years. After Congress passed the Tax Cuts and Jobs Act of 2017, the standard deduction was then doubled, eliminating many from contention for the credit as the standard was usually more. As noted by Investopedia, the average number of people going after the Mortgage Interest Tax Deduction from 2018 to 2019 is anticipated to drop from 16.46 million to 14.35 million, proving that the need-pool for this deduction has been shrinking.
The Mortgage Interest Statement is Form 1098 for the IRS, which is a pretty-straightforward document to jot down the amount of interest you paid, as well as your lender’s information.