We’ve a half-month away from the end of 2014. It’s that time of year when everyone says, “Wow, time sure does fly!” and the hustle and bustle of the holidays only seems to accelerate time. If you’re in the middle of closing on a new home using your VA home loan benefit or refinancing an existing VA loan, the clock is indeed ticking. But as the year closes out, don’t short-change yourself.
For those that itemize their deductions on their income tax returns, mortgage interest is one of those nifty items that taxpayers take advantage of lowering taxable income. Property taxes also qualify for tax deductibility status. Okay, disclaimer here, this isn’t construed to be tax advice and you should consult a tax professional for your situation. Now, we can move on.
At the beginning of each calendar year, mortgage companies send out their IRS form 1098 to their borrowers. On this form, the amount of interest paid during the previous year is displayed. Taxpayers use this amount when deducting mortgage interest from taxable income. Yet if you’re closing on a VA loan this month, you’ll soon receive form 1098 from your old mortgage company but it can take quite some time to receive the interest paid from your new lender. It’s a relatively small amount compared to the total interest paid this past year but it’s still a legitimate deduction. So too property taxes.
Instead of waiting for a 1098 from your new lender next year you can substitute your settlement statement which will show prepaid interest charges paid by you along with prorated property taxes. This is such a small amount it’s often overlooked. If you like to pay more taxes than less, this won’t apply to you. But if you do like to save as much as you can, don’t forget these two items.