Bill Benefits Those Without Mortgage Paymentsby Tim Manni
If you’re thinking the new housing bill won’t benefit you because your mortgage is paid off, think again. A component of the bill offers a tax deduction for those who pay state and local property taxes, but do not itemize their federal taxes.
Borrowers who don’t itemize most likely include elderly homeowners with no mortgages or borrowers with small loans. In order to take advantage of the mortgage interest deduction, a taxpayer must itemize, and their tax credit needs to exceed the standard deduction ($5,450 for single filers, $10,900 for joint filers) presently.
This tax break provides up to $500 for single filers and up to $1,000 for joint filers. The tax credit is especially applicable to seniors, or those with minimal or zero mortgage payments. The tax deduction will apply to 2008 tax filings due April 15, 2009. We’ll have to wait and see if the tax credit is extended past 2009.