For most Americans (but not all), mortgage interest is tax-deductible in the year in which it was paid.
With some advance planning, therefore, a homeowner can increase his 2007 tax deductions by paying additional mortgage interest while the calendar still reads 2007.
The key is to make the mortgage payment due January 2008 a few days early.
Because mortgage interest is paid in arrears, a mortgage payment due January 1, 2008 accounts for interest that accumulated throughout December 2007.
Rather than make January’s mortgage payment on January 1, 2008, a homeowner can send payment this week or next — while it’s still 2007 — and increase the amount of mortgage interest paid in 2007. This can increase 2007’s tax deductions.
Tax planning can be a complicated issue and not all homeowners qualify for mortgage interest tax deductions. Be sure to consult your tax professional before making any tax planning decisions. If you are without a tax professional, call or email me; I would be happy to make a trusted recommendation to you.