Loans |
Mortgage — Homeowner Tax Savings
Debt consolidation can cut your taxes too
If you have credit cards, student loans, auto loans or other personal debt, you may be able to reduce your monthly payments, potentially get a lower interest rate and have the ease and convenience of only having one low payment a month. How? Just by refinancing your current mortgage — it's that easy!
You could even get additional cash to use for other expenses - maybe to buy a new car, make home improvements, or something else you want. But lower monthly payments, lower rates and one low payment are not the only advantages of refinancing — you could also save money at tax time. The interest paid on home loans is generally tax deductible (consult your H&R Block tax professional for details). What does that mean for you? Here's an example:
Of course, this is just an example, and depending on your income and many other financial factors, the actual amount you can deduct will vary. Be sure to contact an H&R Block tax professional to see what tax-saving opportunities await you if you choose to refinance now.
Use our Cash Back Calculator to see how much cash you may be able to get by refinancing now.
If you have credit cards, student loans, auto loans or other personal debt, you may be able to reduce your monthly payments, potentially get a lower interest rate and have the ease and convenience of only having one low payment a month. How? Just by refinancing your current mortgage — it's that easy!
You could even get additional cash to use for other expenses - maybe to buy a new car, make home improvements, or something else you want. But lower monthly payments, lower rates and one low payment are not the only advantages of refinancing — you could also save money at tax time. The interest paid on home loans is generally tax deductible (consult your H&R Block tax professional for details). What does that mean for you? Here's an example:
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If you spend $6000 this year in credit card payments, and another $4000 on a car loan, you may be paying around $1200 in interest on this debt1 — none of that $1200 is tax deductible. If you were to refinance your mortgage and consolidate that debt into a new home loan, the interest you pay on the new mortgage may be tax deductible (consult your H&R Block tax professional for details). You could get the lower payments and better rates generally available with home loans, and you get to potentially cut your taxes at the same time.
Let's say your original mortgage balance was $200,000 and you took out a new 30-year, $300,000 mortgage so that you could consolidate all your debts into this new loan. All of the interest you pay on the new $300,000 loan may qualify as a tax deduction (consult your H&R Block tax professional for details). In the first year of a new 30-year fixed rate mortgage, that might be as much as $20,000 or more.2 Reducing your taxable income by that much is an excellent way to cut your tax burden. |
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Of course, this is just an example, and depending on your income and many other financial factors, the actual amount you can deduct will vary. Be sure to contact an H&R Block tax professional to see what tax-saving opportunities await you if you choose to refinance now.
Use our Cash Back Calculator to see how much cash you may be able to get by refinancing now.
1 Assumes a monthly credit card payment of $500 on a balance of $5000 at 14% interest, (monthly payment on interest equaling more than $50/month); and a payment of $333/month on a 5-year auto loan balance of $10,000 at 7% interest (monthly interest portion equaling more than $50/month).
2 Assumes standard amortization for the first year of a 30-year fixed rate mortgage at 6.75% interest with an initial balance of $300,000.
2 Assumes standard amortization for the first year of a 30-year fixed rate mortgage at 6.75% interest with an initial balance of $300,000.