As we enter the tax season of 2019, it’s time to start getting your finances in order and preparing to file. This year promises to be complicated since the new tax laws have gone into effect and no one knows quite what to expect when they file. With updated tax brackets, increased standard deductions, revised estate tax laws, and state and local property tax deductions capped at $10,000, it can be a lot to take in, and you may owe or receive more than you usually would. Here are some ways you can consider or leverage your mortgage as you file your taxes this year and anticipate your tax return.
Mortgage Interest Is Still Deductible
One of the benefits of home ownership is being able to deduct the interest that you pay on your mortgage loan. While this deduction has had some restrictions placed on it, it is still available and is still a deduction you should claim. In order to do so, you must itemize your deductions on Form 1040 Schedule A and claim mortgage interest. This can include loans on home-buying, home improvement loans, and any loan you took out to improve the value of your property. The tax laws of 2018 increased the standard deduction but left mortgage interest as an itemizable deduction. Make sure to compare the total of your itemized deduction to the standard deduction, however, to ensure you’re getting the best deal.
If You’re Going to Receive More Than Usual…
Once you’ve done the math and learned that you may potentially receive more than you expected, you should think critically about the wisest way to invest those extra funds. Many people will take a vacation, buy a new set of furniture, or go on a shopping spree, but often the best way to get long-term value out of a lump sum like this is to put it back into your home. Whether that means making an additional payment on your mortgage loan or doing some home improvement projects that you’ve been putting off, investing in your home is always a good bet to see long-term returns and increase the value of your property.
If You’re Going to Owe…
On the other hand, if you have claimed all available deductions and are still looking at a negative number—don’t lose hope. There are a few ways you can use your mortgage to help you pay off that deficit in one go. Refinancing your home is always an option, which in addition to cashing out some of the built-up equity in your home can also lower your monthly interest rate. Alternatively, with a standard home equity or Texas cash out loan, you can take out a tax-deductible equity loan to pay off that bill quickly.
If you need help getting your finances in order this tax season, we can help. Park Place Finance offers a variety of loan options for all types of needs, from refinancing to cashing out. Contact us today and let us know how we can help.