Tax Tips for Homeowners
Attention homeowners! Over a million Americans overpay their taxes by an estimated $945 million every year. Here are the top tax deductions, in no particular order, that you need to know about:
- Mortgage Interest. This is usually fully tax-deductible, and applies to multiple mortgages as long as it doesn’t exceed $1 million.
- Home Offices. Do you work from home? Qualified home offices have tax deductions for the maintainence of that portion of the home. That includes painting, upkeep, and even indirect expenses like garbage pickup and utilities. Of course every situation is different, so be sure to check with a professional tax advisor before deducting these expenses.
- Private Mortgage Insurance (PMI). If you bought your home after January 1st, 2007, and have an adjusted gross income under $110,000, you can claim the PMI you’ve paid throughout the year.
- Points. Did you pay points to lower your mortgage rate on your refinance or purchase last year?
- Moving Expenses. Homeowners who had to move over 50 miles for a new job can write off the cost of the move, household goods, vehicles, and other directly related expenses.
- Vacation Homes. Now is the cheapest time to buy a home, so if you already have your dream home, it may be a good idea to get a vacation home. You can deduct real estate taxes, personal property taxes, mortgage interest, and points from your vacation home.
- Property Taxes, State Taxes and Local Income Taxes. Some cities/towns/or municipalities have local income taxes that are deductible, and property and state taxes are usually deductible as well. If you don’t think you pay property taxes, it might be rolled into your mortgage payments, so be sure to check old records, and deduct that too.
- Home Buyer Tax Credit. This is probably the best deal out of the list. Ending on April 30th (which is when you need your purchase agreement signed by), this tax credit is for any first time buyer or existing buyer if you’ve been in your old house for over 5 years.
- Health-Related Improvements. If you have a chronically ill or disabled person in your home, home improvements made for medical purposes (that do not add value to the overall home) can be tax deductible.
- Capital Gains with No Income Taxes. Did you sell a home last year? If so, the government will let you realize a tax exempt profit of up to $250,000 once every two years, so be sure to check your records.
As always, you should check with your tax advisor to determine which of these deductions apply to you.