Mortgage Interest: Std. Deduction vs Itemized Deduction
 

I recently bought a condo and trying to figure out if my standard deduction would be higher or my itemized deduction would be higher because of the interest I'm paying on the condo. Right now it looks like my total interest on my mortgage and the finance charges would be around 2500 by the end of 2004. Can I pay future mortage payments slated for 2005 now and claim the interest as part of my itemized deduction for 2004?

What else can go under my itemized deductions that's related to home buying? Pre-paid items? fees? Anything that would make it more than my standard deduction?

Thanks a bunch

Property tax and state income tax can also count if you itemize. Also, any interest you pay for in 04 can be claimed on your 04 taxes. You could pay your Jan payment early to get it to count in 04.

:stupid:

Tax is a big one, but if you just moved in you might not have that big of a bill.

Short of paying the January bill early, I don't think you can pay INTEREST expense upfront. You can pay the principle in advance, but not the interest.

Have any other deductions? Medical bills? Childcare? You can always put a chunk into a 401k if you haven't contributed to that yet this year.

You can also deduct any points you paid at inception, and I *think* some of the fees.

You can also deduct donations to charitable institutions.

I used to put money into my 401K but I stopped because I borrowed against it for my down payment. I already paid half of it back. Hmmm...well I guess this will be an interesting tax season come April.

Child care expenses and charitable contributions really add to your itemized deductions (So be sure to give away your crap and claim the deductions before 12/31 and claim the money you give to your church/religious organization as well).

Also, whenever you borrow, think about borrowing against the equity in the condo versus standard loans, you can deduct the interst from those home equity loans as well.

If you have alot of medical bills, you can deduct a portion of those as long as they are over 7% of your AGI.. (I think that is the correct percentage).

As best I can remember, you can deduct only the interest and taxes paid as far as items from your closing costs go. These are not always listed when you get your 1099 for interest paid in the year so keep track of what you paid. Points paid on a first mortgage are deductable in the year of the financing, but points on a refinance must be spread over the life of the loan. You usually recieve your property tax bill around this time with half due in December and half in April, but you can pay it all this year if you want to count it as this year's deduction. Another thing to remember is you can claim up to $250 in charatable contributions without documentation - if you donate more make sure you have receipts. Claim at least the $250. Don't forget about an IRA too. Contributions to regular IRAs are deductable (up to specified limits depending on income) and you can have both a regular IRA (deductable) and a Roth IRA (not deductable- you pay taxes on the money now but none when money including interest when you are retired). You should easily be able to get a larger deduction by itemizing than by taking the standard deduction. Congratulations on the new place!

That's why I always suggest if you buy a property to do it in January or early in the year. All the points on 1st mortgage can be deducted as well as closing costs, and it starts your way to clear the standard deduction threshold with mortgage interest every month.

If you buy late into the year, you might not be able to clear your std deduction.