How to Deduct Interest & Taxes Paid on Your Home

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Deducting interest and taxes paid on a home is one of the major benefits of being a homeowner, as interest spent on a mortgage will come off of 1040s. Get larger refunds after filing taxes with help from a financial specialist in this free video on interest rates and loans.

Part of the Video Series: Interest Rates
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Video Transcript

Hi, this is Matt McKillen with Innovative Financial Group. The question posed to me today is how do you deduct the interest in taxes that you've paid on your home. That's one of the major benefits to being a homeowner is that whatever you spend in interest on your mortgage on an annual basis gets to come off of your 1040's against your taxable income. Same with property taxes, they are generally tax deductible also. One of the benefits again is that if let's say you're making 30,000 dollars a year and let's say you get a statement from your mortgage company that says that you've paid about 12,000 dollars in interest over the life of your loan in a 12 month period, what's going to happen is that 12,000 dollars is automatically going to come off the 30,000 dollars that's showing on your W-2 for example which means that you're only going to be taxed on 18,000 dollars of your income. It usually leads to larger refunds for clients. If you're renting, you don't get the benefit of any of that. If you're paying rent somewhere, you're not paying interest or taxes or property taxes, you would be taxed on the full 30. Again it just makes a lot of financial sense to own a home because of the tax deductions available. My name is Matt McKillen, I'm with Innovative Financial Group.

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