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Home Owner Tax Tips

June 5th, 2010 by The Blass team Leave a reply »

Buying and owning a home is a big expense along with the purchase price, there are property taxes, heating and cooling costs, maintenance expenses, etc. The good news is that there are tax savings available to homeowners.

Mortgage interest and points – Most homeowners can deduct the interest paid on their mortgage as an itemized deduction on Internal Revenue Service form 1040, Schedule A. (Deductions reduce your adjusted gross income when computing your taxable income.) And because mortgage interest makes up much of homeowners’ monthly mortgage payments, that’s a big tax break.

However, if your mortgage is more than $1 million, or your home equity loan is greater than $100,000 you may be out of luck.

The amount of your first mortgage may limit how much you can deduct for mortgage interest on your home equity loan, especially if the debt on your home is greater than your property’s value. Read the Internal Revenue Service’s Publication 936, Home Mortgage Interest Deduction for complete requirements and information.

If you itemize your deductions on Internal Revenue Service form 1040, Schedule A, you also may be able to deduct your mortgage points in full the year they were paid. If you are refinancing, you can, based on the number of years of the loan, deduct some of the points. Read the IRS’s Tax Topic 504 – Home Mortgage Points to get all the requirements and details.

Real estate taxes – As a homeowner, you no doubt hate paying property taxes. But the good news is that real estate taxes can be claimed as an itemized deduction on Internal Revenue Service Form 1040, Schedule A. To find out how much real estate tax you’ve paid, check your escrow account through your lender.

Moving expenses – If you had a work-related move (say, if you landed a new job or if your employer relocated you to a new location), you may be able to deduct your moving expenses. (Use IRS Form 3903 to calculate how much you can deduct and note those expenses on Form 1040.)

To qualify for the deduction, your new job must be at least 50 miles further from your old home than your old job was. Also, you need to have worked full-time for your employer at least 39 weeks in the first 12 months after your move to your new home. Read Topic 455 — Moving Expenses from the IRS for more information.

Capital gains tax exclusion – Imagine being able to sell your home, pocket the profits and not have to pay Uncle Sam a dime in taxes. That’s the tax benefit available to homeowners as long as they’ve owned their home for at least five years and lived in it at least two of the five years before selling it.

Single homeowners can realize up to $250,000 tax-free in sales gain from the sale of a home, while married joint filers can see up to $500,000 tax-free in gains. Read Topic 701, “Sale of Your Home,” for more information.

For help with any of your real estate needs please contact The Blass Team! www.blasshomes.com

Tucson Real Estate

Home Owner Tax Tips

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