January house payment in December gets you an extra mortgage interest deduction

December 6, 2010

As I was putting together the latest weekly tax tip (you do look at those over there at the top right of the ol' blog's home page, don't you, or at the consolidated weekly tax tips page?), I realized I had never specifically blogged the tax-saving advantage of making your January mortgage in December.

So pardon the duplication, but it's an easy tax move worth the extra attention.

Here's the deal.

When you pay your January mortgage in December, that payment's mortgage interest can be deducted on your Schedule A when you file your tax return next year.

Wait, some of you are asking, isn't that prepaid interest, which in most cases (certain loan points are an exception) cannot be deducted in full in the tax year in which it's paid?

No worries. House payments are made at the end of your occupancy period. That means the payment on each 1st of a month covers the previous 30 or so days you just spent in your home.

This is the opposite of rent, where the landlord wants that money at the beginning of the month to cover you staying in his or her place for the upcoming month.

So the interest in your Jan. 1 mortgage payment includes interest for December's loan period. That makes it eligible to be deducted for this tax year.

If you plan to take advantage of this extra interest deduction, do so as soon as possible. By paying early, your loan company will be able to get it on the books in plenty of time to be reflected on your annual Form 1098 that shows your house payment tax details.

Form alert: Don't worry if your 1098 looks different than the official IRS form. Most lending institutions don't use the IRS document. Instead, they produce "substitute" 1098 statements that include all the info on the IRS form, just in a format that fits the lender's overall paperwork system.

If you just can't swing the early mortgage payment until closer to Dec. 31, that's fine. It is, after all, holiday gift-buying time.

As long as you get it en route to your loan company by the end of the month, you can go ahead and deduct the extra interest on your 2010 tax return.

But in this case, include a statement letting the IRS know why your amount differs from your banker's annual 1098 tally, since the tax agency gets a copy of that document, too.

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
Some IRS TACs will be open this Saturday, June 27

June 22, 2026

Some IRS Taxpayer Assistance Centers will be open one final Saturday on June 27. The…

Read More
Tax Season 2026 Continues!

We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 26, millions who were expecting refunds filed immediately. Most of us got our returns to the Internal Revenue Service by April 15. But plenty of taxpayers also got extensions. They are looking at an Oct. 15 filing deadline.

Those procrastinating filers aren’t a problem. In fact, the IRS appreciates taxpayers who take time to fill out their 1040 forms correctly. It also is grateful that tax submissions are spread out a bit, especially now that the IRS is a leaner agency. Processing returns is easier when they arrive throughout the year instead of in massive bunches.

But enough about Uncle Sam’s tax collection issues. The focus now is on all y’all who filed for extensions, giving you another six months to complete your return. Since your new mid-October due date will be here before you know it, let’s get started now on meeting it.

The ol’ blog is here to help you finish up your extended Form 1040. You can start with January’s tax tips page, which has links to the rest of the year’s tips by-month collections. You also can peruse various tax categories for more tailored advice by clicking on the More Tax Posts drop-down menu at the top of this (and every) page.

And to make sure you don’t miss your new filing deadline, the count-down clock below will let you know just how much time you to file by Oct. 15. At the latest.e. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments