When do you pay your mortgage? If you are like me, you probably pay the mortgage bill as close to the deadline as possible. This means that most people usually pay around the 7th of every month. (My bank will consider the bill as overdue on the 15th.) However, I make one exception every year to make sure and pay the January payment in December right before New Year’s Day.
By paying before the New Year, I can take the home mortgage interest deduction in a few months – April 2012. If I wait until January 7th, then I won’t get the tax write off until April 2013. Is it really worth your time to change your routine and pay early once per year? You’ll have to answer that one yourself, but I know it is well worth it for us. We have 3 mortgage bills – a primary residence, a rental home, and a 4-plex. All of these payments add up and I can’t ignore the benefit of getting the tax deduction a year earlier.
While you shouldn’t buy a house just for the mortgage deduction, it is still wise to take advantage of any deduction you can. This is especially true for rentals. It is difficult to generate positive cash flow in the early years of a rental property and we need any help we can get.
I know it is not fun to think about taxes during the holidays season, but changing the mortgage payment date is pretty easy to do. Also, if you have been putting off your portfolio maintenance, you only have a few days left to sell off your losers. Once you’ve done these things, then you can enjoy the New Year party without worry.
I just scheduled my mortgage payments to be paid on Friday, December 30th. Do you have any last minute tips for the end of the year? We are going after-Christmas shopping next weekend and that’s about all on our list. After that, we’ll enjoy the New Year at home, probably stay in bed snoozing.
Today’s rate is even lower than in 2011. You should check with Quicken Loans to see if you can lower your payment.
Disclaimer: I am not a tax professional and you will need to verify all the information above with your accountant before acting on it.