Tax Season: How Your Mortgage Impacts Your Return

Tax season doesn’t have to be stressful — especially when you understand how your mortgage could actually work in your favor. Whether you’re a first-time homeowner or a seasoned pro, knowing how to maximize your deductions and credits can lead to a bigger refund or reduce what you owe.

At Rapid Home Loan, we’re not just here to help you secure a mortgage — we’re here to help you make smart financial decisions long after closing. Here’s how your mortgage could impact your tax return this year.

🏠 1. Mortgage Interest Deduction

One of the biggest perks of owning a home is the mortgage interest deduction. If you itemize your deductions, you may be able to deduct interest paid on up to:

$750,000 of mortgage debt (for homes purchased after Dec. 15, 2017)
$1 million if your mortgage originated before that date

This can lead to significant savings, especially in the early years of your loan when interest makes up a large portion of your payments.

🏦 2. Property Tax Deduction

You may also be eligible to deduct up to $10,000 in state and local property taxes (or $5,000 if married filing separately). This is another major advantage of homeownership that can ease your overall tax burden.

💡 3. Points Paid at Closing

If you paid discount points to lower your interest rate, you may be able to deduct them — either all at once or over the life of the loan, depending on how your mortgage was structured.

📝 Tip from Rapid Home Loan: Keep your Closing Disclosure handy. It lists everything you paid at closing and can help your tax preparer identify potential deductions.

🔧 4. Mortgage Insurance (PMI) Deduction

If you put down less than 20% and are paying private mortgage insurance (PMI), you may be able to deduct those premiums as well — depending on your income and the latest IRS guidelines.

This deduction has been extended multiple times, so check the most recent tax year updates or consult a tax professional.

🏘️ 5. Home Office Deduction (If You Qualify)

If you’re self-employed and use a part of your home exclusively and regularly for business, you may qualify for a home office deduction. This can include a portion of your mortgage interest, utilities, and even depreciation.

Important: This deduction is not available for W-2 employees working from home — only self-employed individuals or small business owners.

🔁 6. Refinancing? There’s Tax Impact There Too

If you refinanced your home this past year, some of the closing costs — like points — may still be deductible. However, they’re usually spread out over the life of the loan rather than deducted all at once.

Let Rapid Home Loan know if you refinanced recently — we can walk you through what to look for and how to document those costs.

📂 What You’ll Need for Tax Prep

To make the most of these deductions, gather the following:

Form 1098 (provided by your lender; shows mortgage interest paid)
Closing Disclosure (for new purchases or refinances)
Property tax statements
Records of any points paid or PMI premiums
Receipts for home office expenses (if applicable)