Tax Tips on Deductions for Home Owners
Well its tax season so I thought I would put a little something together for all you home owners to help with the duty of filing and paying our Uncle Sam. First of all, I am not a CPA so the best person to get any advice in the area of taxes, would be your personal accountant or bookkeeper; however, this article should help point you in the right direction.
To get started, if you are one of the many individuals who do not itemize your tax return with the schedule A form, you can now use the Schedule L form and file a larger deduction than you could in previous years for Real Estate taxes. It may be worth taking the time and effort to fill out the form.
Loan Deductions
Any mortgage interest you have paid on your home (or second home) is usually tax deductible, and you may be required to itemize your return. You may also be able to report any mortgage insurance premiums (PMI) paid as a reduction in your income.
If you have taken out any home equity loans, whether or not you actually used it on the home, can also be tax deductible.
Any of the above deductions will require you to itemize your return with the use of the Schedule A form.
Special note regarding PMI, if you have paid down your home note 78%, you may not be required to pay the insurance premium any longer, check with the mortgage company regarding whether you qualify to cancel the mortgage insurance premiums.
Energy Efficiency
There are several deductions that can be made and tax credits you can receive for various improvements you have made to your home should they be considered energy efficient improvements or additions. You can also file for various other improvements even if they are not considered “energy” efficient.
Home Buyer Tax Credit
Don’t forget about the home buyer tax credit. New home buyers and move up buyers are eligible. You can read all about the Home Buyer Tax Credit on one of my previous post.
What if you sold a home?
If you are a single home owner any profit from the sell is tax free up to $250,000 and up to $500,000 for married couples. Anything above that amount is almost always given a long-term capital gains tax, which is taxed at 15%.
Forms and helpful links:
You will probably use one of these two forms: Schedule A or Schedule L
Info on deductions due to disaster
Go to this link to see vaious types of tax credits for home improvements, upgrades, additions, etc.
Sources: Realtor Magazine
www.HouseLogic.com
