Fair Tax Nation

Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

Enjoying the tax relief on mortgage interests paid

The mortgage tax relief is mainly the advantage offered to mortgage holders, who have been making payments on the mortgage interest. The relief offered is mainly on the basis of the interest paid by the homeowner. The relief is offered almost on every type of mortgage starting from the mortgage on a new home, mortgage taken out for home improvements, mortgage taken out to consolidate debts, and so on.

Now, the tax relief is mainly offered on the qualifying mortgages.

What are the qualifying mortgages?

A qualifying mortgage is a secured loan with regards to the interest relief. It can be used in order to purchase, or improve and remodel or may be to improve your home. So, if you have taken out a qualifying mortgage, you have the option to claim tax reliefs with respect to the interests paid on the home loan.

There is another option for you to claim tax relief with respect to the payments made on the interest with regards to the mortgage especially for your divorced spouse. This can happen especially in case a dissolved civil partnership, or may be dependent relatives (it is may be for this person you are making the claim on the tax credit). So, if you simply switch lender to obtain better offer with regards to the interest, it isn’t considered to be the same as that of taking out a new mortgage.

There are rules on the actual number of years through which you as the first time home buyer will have the option to receive all of the mortgage tax reliefs. This amounts to 7 years. This means, with the beginning of the eighth year with regards to your mortgage, the homeowner will no longer be considered eligible for getting any kinds of mortgage tax breaks.

There are also various criteria which you as the homeowner will have to meet in order to be eligible for the tax reliefs. So, these requirements are:

  1. The mortgage taken out will have to be used for the purchase of the home improvements which will be made on the primary residence.

  2. Tax relief is not given with regards to the purchase of any kinds of improvements made to the vacation homes or may be investment properties which you may owe

In addition to this, there can be some restrictions with regards to the location of the home, and where you as the homeowner are paying your taxes.

For more information on this you can join the discussion in our mortgage forums.

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Comment by Marilyn Rickert on April 5, 2013 at 9:39am

Under the Fair Tax your mortgage payements are 100% tax free -- with not forms or qualifications. The Fair Tax makes homes more affordabe. If you purchase a previouly owned home -- no Fair Tax due. When you make your mortgage payements -- no Fair Tax due on principal or interest. More people will be able to afford homes under the Fair Tax. 

Comment by cary henderson on March 4, 2013 at 11:37am

With the FairTax, there is no tax due unless something is bought, thus no thing to deduct from.

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