Owning your home comes with some tax benefits. One of them is the deduction of the interests of the mortgage that you pay, a benefit that you have during the years in which the credit is valid.
How much can you deduct?
It is an amount that varies from year to year for two reasons:
1. The benefit applies to the actual interest paid. That is, the result of the subtraction of the annual rate of inflation, to the interest rate of your credit. For example, if your mortgage interest rate is 10% and inflation in 2020 was 3.15%, the real interest is 6.85%, and that is what is deducted.
Annual inflation rate – Interest rate on your credit = Deduction
2. Every year that your credit advances, you pay less interest and contribute more to the debt. In the first years (5 to 8 years) more than 80% of your monthly payment corresponds to interest, later this percentage is reversed.
So, the amount to be deducted annually will depend on inflation and how close you are to finishing paying your credit.
How to deduct your taxes?
Every year, during the month of February, you must request proof of interest from the financial institution that granted you the loan. This document reports the total interest you paid during the previous year and is what you must present on your tax return. It must contain your tax information: RFC, name, company name, itemized VAT, the location of the property and the interests paid.
You can request it by phone or directly at the branch of the financial institution. If your credit is with Infonavit, just go to “My Infonavit Account”, in the My Credit menu look for the option Evidence of Interest for your annual declaration and right there you can download the document.
Keep in mind that in order for you to deduct the interest on your mortgage, the amount of your credit must not exceed 750,000 investment units. If your mortgage was greater than this amount, you will deduct the interest paid up to that amount.
According to the National Commission for the Protection and Defense of Users of Financial Services (Condusef), the deductibility applies to banking institutions, Infonavit, Fovissste, Sofomes and Sofoles.
The return of real interest is also subject to a deduction limit, since you can only deduct the real interest on your mortgage loan if the amount, plus the sum of the other possible deductions that you include in your return, are not greater than 15% of your annual income.
Notify in your job
If you work for a private company, you receive your income via payroll and you earn less than 400,000 pesos per year, the annual declaration is made by the company for you. So if you want to deduct some personal expenses, such as interest on your mortgage, you must notify the company that you will make the statement on your own. Do it as soon as possible to follow the process that I indicate and thus be able to deduct.
Take advantage of this tax benefit and reinvest that money in your favor, for example in advancing payments or making improvements to your property that maintain and increase its value.