Posted on: March 29th, 2022

Unlike the 2021 federal tax filing deadline which was extended, the federal tax filing deadline for 2022 is Monday, April 18th.  With interest rates at an all-time low the last two years, the housing market saw a surge in first-time home buyers. Homeowners should be aware of all available tax deductions, including the mortgage interest and property tax deductions.

 

The cap on taxable income that can be reduced for the mortgage interest deduction depends on when the property was purchased and the filing status. Lenders generally issue a 1098 form showing mortgage interest paid the previous year; will also send a copy to the IRS. If you have the tendency to toss your mail, you can log on to your account with your mortgage company and pull the form. Keep in mind a 1098 will only be issued if $600 or more was paid toward mortgage interest.  The cap on the deduction for property taxes paid also depends on filing status.

 

In order to claim the mortgage interest and property tax deductions, you cannot take the standard deduction. Instead, you must itemize using Form 1040 Schedule A. If your itemized deductions are not significant because you purchased later in the year, and therefore did not pay a significant amount of interest or property taxes, the standard deduction may be more beneficial. You should consult with an accountant to review all of your options.