Homeownership offers many tax breaks, but to maximize them, you need to make some moves by Dec. 31.
Start with your mortgage payment. An early January payment could lower your upcoming Internal Revenue Service bill.
Unlike rent, which you pay beforehand (i.e., your Jan. 1 bill covers your stay in the rental unit for that coming month), your mortgage payments are made at the end of your occupancy period. That means your Jan. 1 mortgage statement represents interest for the month of December, making it a tax-break-eligible bill for this year.
By accelerating that payment even by just a day, you get an additional tax deduction for the interest paid.
Don't get greedy, though. You can't make your February, or any other upcoming, mortgage payment early to boost your year-end tax deduction amounts. Tax law generally prohibits write-offs for prepaid interest (there is an exception for loan points in some cases). Each year, you can deduct only the home mortgage interest for that year.
You also want to make sure you don't cut it too close in making the early payment. Get the check in the mail in plenty of time for it to arrive at your lender by year's end. If you pay online, be sure you make the electronic transaction in time to have it credited to this tax year's payment amount.
That way, the added interest will show up on the annual statement (usually a Form 1098 or an IRS-acceptable substitute) you'll get from your lender in late January, detailing your deductible mortgage activity.