vol.11 | Things you should know to avoid losing out on the mortgage tax deduction
The mortgage tax deduction is
a major system for those who have bought a home.
However, the mechanism is a bit complicated,
and there are points you might lose out on if you don't know them.
This time,
I will summarize the points I felt were important to know
after filing my own tax return for the mortgage tax deduction.
1. A tax return is required for the first year
For the mortgage tax deduction,
you must file a tax return only for the first year.
Even company employees are no exception.
From the second year onwards,
you can handle the procedure through year-end tax adjustments,
but for the first year, you must file it yourself.
2. The deduction amount changes based on the home's performance
The mortgage tax deduction is
The energy-saving performance of the home
changes the loan limit eligible for the deduction.
For example,
・Long-term quality housing
・ZEH-level housing
・Energy-saving standard housing
have different limits.
Even with the same mortgage,
the deduction amount changes depending on the home's performance.
③ The deduction amount is determined by the loan balance
The mortgage deduction is
Year-end loan balance × 0.7%
calculated as follows.
However,
・Loan limit
・Amount of income tax
and other conditions
will change the actual deduction amount.
④ It is calculated together with things like the hometown tax donation program
In your tax return,
・Mortgage interest deduction
・Hometown tax donation (Furusato Nozei)
・Medical expense deduction
and others are calculated together.
Therefore, the tax refund is
not just the amount for the mortgage interest deduction,
but is displayed as a total amount.
⑤ The deduction lasts for a long period
The mortgage interest deduction
lasts for up to 13 years.
Although the amount changes every year, it becomes a quite significant sum over a long period.
Conclusion
The mortgage interest deduction is
a very helpful system, but some parts of how it works can be a bit difficult to understand.
I hope this will be helpful for those who are about to take out a mortgage or file a tax return.