Real Estate Home Loans in Boise Idaho, Benchmark Mortgage - Prime Equity Group

Looking for an extra 2010 tax deduction? Consider making your January mortgage payment a few days early.

It's a simple strategy that works because of how mortgage interest works.

Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it's been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December.

And for a lot of Idaho homeowners, that mortgage interest is tax-deductible.

By making January's mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don't cut it close, though. It's best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork.

Most importantly, though, before prepaying on your mortgage, talk to your tax professional.

Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The "pay early" plan could be a wasted effort for you, ultimately, depending on your taxpayer profile.

If you don't have an accountant that you trust, call or email me anytime; I'm happy to make a recommendation to you.

Although recent reports of plans to eliminate or modify the mortgage interest deduction are widely exaggerated, the National Association of Realtors® will remain actively engaged to ensure that the nation's 75 million home owners will continue to receive this important benefit.

The Deficit Reduction Commission has released its recommendations toward reducing the U.S. deficit, which include modifying a number of popular tax breaks, including the mortgage interest deduction. President Obama created the 18-member, bipartisan commission earlier this year to identify ways to balance the budget by 2015. The commission does not have any legislative power, and Ada County Association of REALTORS says that the commission's report is just the first step of a lengthy process.

The MID allows an individual to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional property. Individuals claiming the MID also must itemize their taxes.

The ability to deduct the interest paid on a mortgage can translate into significant savings at tax time. For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year.

According to the most recent IRS tax return data available, 65 percent of families who claim the MID earn less than $100,000 per year. "Home owners already pay 80 percent to 90 percent of U.S. federal income tax, and among those who claim the MID, almost two-thirds are middle-income earners," said NAR's Chief Economist Lawrence Yun. "If the tax break is modified or eliminated, home values could fall 15 percent nationwide, as buyers discount the value of the MID in their purchase offers."

ACAR said the MID saves the average home owner thousands of dollars at tax time and helps American home buyers get into their first house.