Before we know it April 15th will be here and our taxes will be due. If you are a home owner you may be eligible for some additional tax breaks that you aren’t aware of.
Before you meet with your accountant review this list to see below to see which itemized deductions you qualify for. Then bring any pertinent information to your appointment.
Tax Break Tip #1 Interested Paid At Closing
On your closing statement there is typically a line called “home mortgage interest”. If you purchased a new home for less than 1 million dollars, you can add the interest you paid to your itemized deductions. This would be included on a Form 1040, Schedule A.
Tax Break Tip #2 Property Taxes
The key here is that the property taxes you are paying are for the true assessed value of your property. If that is that case you are able to deduct state and local property taxes. The exception is if you have money that is still in escrow that is reserved for property taxes.
Tax Break Tip #3 Home Office
As more and more of us are working from home, we are now able to file for deductions for our home office of our small business. The key here is to have an official space within your home that is used exclusively as your place of business. If you meet these requirements you can deduct office supplies, repairs, upgrades, insurance, and depreciation.
Tax Break Tip #4 Fees For Points
If you paid points when you obtained your mortgage, you can deduct the fees. You just have to make sure that all of the fees are associated with your purchase. If you refinanced your mortgage you should talk with your accountant about the fees for points that qualify as a deduction. The deduction is a bit different with a refinance as the points must be deduced over the term of your new mortgage.
Tax Break Tip #5 Sales Expenses
As we all know there are always investments that need to be made prior to selling your home. You can include any costs, fees, and repairs associated to the sale of your home that you incurred within 90 days of your sale. This includes title insurance, broker’s fees, staging expenses, and advertising expenses.
Tax Break Tip #6 Interest on Home Improvement Loans
If you took out a loan for “capital improvements” on your home you are able to claim this deduction. Capital improvements include and improvements that add value to your home such as adding an extra room or new plumbing. Things like painting, changing carpet, and redecorating are not qualifying deductibles.
Tax Break Tip #7 Interest on Construction Loans
This deduction is only applicable if you take out a construction loan on your primary place of residence or second home. This deduction will only cover the first year of your loan, even if the construction project extends beyond one year.
Tax Break Tip #8 Home Insurance Premiums
This potential deduction is one you will want to bring to bring to your accountants attention as the qualifying terms are a bit tricky. You may qualify to deduct your premiums for your primary residence and second home, if your income falls within certain parameters. Check with your accountant to see if you qualify.
As tax laws and criteria to qualifying for deductions are in constant flux, check with your accountant to ensure you are maximizing your deductions.