Refinance Your Georgia Mortgage and get a Tax Deduction

rayman3Today’s Guest Blog Courtesy of Jeff Rayman with Rayman Financial Solutions

Refinancing your Georgia home loan is a great idea if you can get a lower interest rate, ideally 1.5-2% lower and you plan to stay in the house for at least two or more years.  If you plan to move or the interest rate is not a substantial decrease, the closing expense on the refinancing may be more than your benefit.  Each situation is unique.

Most people don’t realize that the points on a refinance are tax deductible and others think the entire amount is deductible in the year refinanced.  However, refinancing points charged at closing are tax deductible over the life of the loan.  This means if you refinance and your points are $2,000 over a new 30 year loan, approximately $67 will be deductible on schedule A of your taxes each year.  If you do not itemize, you will not receive any deduction for the points paid to refinance.

When purchasing a new home in Georgia the points are 100% deductible in the year the home was purchased.  This will normally be reported on form 1098 from your mortgage company.  As with all tax deductions, income limits and personal tax situations may result in a lower tax deduction.

Don’t forget if you sign a contract on a home by April 30, 2010 you may be eligible for the $8,000 or $6,500 tax credit on your 2009 tax return. If you close after you have filed your 2009 tax return, please contact me to file an amendment so you don’t have to wait for your credit. As of today, the closing on the home purchase must be completed by June 30, 2010.

Please contact me at jeff@raymanfinancial.com or 678-469-6931 with any tax questions related to a new home purchases, a recent refinance or to have your business or personal taxes completed by April 15, 2010.  If you need to file an extension, I can file at no charge.

Submitted by Jeff Rayman, CFA, CTP at Rayman Financial Solutions, Inc.

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