Most interest paid on home loans is treated as tax-deductible interest by the IRS. With some careful planning, therefore, you can maximize your 2007 tax deductions.

Before 2007 ends, you will receive your next mortgage statement, due for a January 1, 2008 payment. The grace period extends that deadline by 10-15 days.

Make your payment prior to the due date.

If the lender “books” your mortgage payment on or before December 31, 2007, the interest part of your mortgage payment may be deductible against 2007’s income.

This tax planning strategy may be apropos for people expecting to be in a lower tax bracket in 2008 because of lower sales commissions, or just a general reduction of household income.

Next year’s tax deductions at 25 percent, for example, are not as favorable as this year’s tax deductions at 33 percent.

Before making an extra payment for tax purposes, though, check with your accountant about your personal tax liability and your home’s eligibility for mortgage interest tax deductions.

This entry was posted on Monday, December 10th, 2007 at 12:26 pm and is filed under Cincinnati Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.