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URL:  http://boards.fool.com/i-thought-since-i-paid-in-1998-i-would-be-able-10554049.aspx

Subject:  Re: Mortgage Payment on 12/29/98 Date:  1/27/1999  2:48 PM
Author:  FLboater Number:  9067 of 121144

[[I thought since I paid
in 1998 I would be able to take the deduction in 1998? Am I wrong?]]


kapaandy

You are not wrong, provided you pay the bank for interest due for principal borrowed during the month of December (your January premium). My mortgage payment is "due" on the first of the month, for principal outstanding the prior month. If your "due" date is really the 15th, it could be that only 1/2 of that payment is for December (the 15th through the 31st) and the rest for January 1-14. I doubt this is the case; rather your 15th date is the date payment may be received without a late fee being added. But anyway...

The bank only reports payments received and posted to your payment credit on or before (fundamentally) January 1, and I doubt your 12/31 payment made it by then. In my case, I have done this year-end payment for years to accelerate the itemized deduction. BUT, you will have to manually calculate the interest portion of that 12/31 payment and add it to the amount reported on the bank's statement. You can have that benefit this year, but don't forget for 1999 taxes next year you have to reduce the amount reported by the bank by the same amount (although you may choose again to advance the 1/1/2000 premium due into a 1999 mailing.)

One more caution to watch out for. If you plan to do this year after year as I do, watch out that you don't mail early enough in December (12/20, say) so that you bank gets the payment before 12/31 and it DOES show up on your 1099i statement. If you add an adjustment, you'll be taking the interest payment credit twice!! Uncle Sammy won't like this creative approach.


Good luck.
R
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