Tax Tips For Homeowners
While owning a home can be a big responsibility, there are also a number of tax benefits that go along with it. For instance, many homeowners can deduct their house payments, as well as state and local real estate taxes when they file their yearly income tax return. In order to deduct the expenses of owning a home, however, a taxpayer must file Form 1040 and itemize his or her deductions on Schedule A. To learn more about the kinds of homeownership-related expenses you can and cannot deduct, reach out to a dedicated tax return preparation lawyer today.
Most homeowners take out loans at the time of purchase and then make monthly payments to the mortgage holder to pay that loan off over time. These house payments often include several costs, but the only ones that can be deducted are:
- State and local real estate taxes;
- Interest that qualifies as home mortgage interest, which typically covers interest paid on first or second mortgages, home improvement loans, home equity loans, and refinanced mortgages; and
- Mortgage insurance premiums.
Some nondeductible expenses that are often included in house payments include homeowners’ insurance premiums and any amounts paid by the homeowners to reduce the principal of their mortgage. Repair costs, as well as the cost of utilities, like gas, water, and electricity are also not usually deductible.
State and Local Real Estate Taxes
The majority of state and local governments charge homeowners an annual tax on the value of their real estate. Fortunately, this tax can be deducted if it is assessed uniformly on all real property in the community and if the proceeds of those taxes are for general community or governmental use. The deduction for state and local real estate taxes is limited to $10,000 for those who are married and filing jointly and $5,000 for taxpayers who file separately.
There are also real estate taxes that people must pay when they purchase a home. Typically, these taxes are divided between the buyer and the seller, so that each party pays for the portion of the tax year that they actually owned the home. The purchaser’s share of these taxes is fully deductible for the year the property was sold if those taxes were paid at settlement or closing.
Speak with an Experienced Tax Attorney Today
Many new homeowners forget, due to the excitement that comes with purchasing a new home, that they not only have new tax obligations, but may also qualify for special deductions. Failing to keep track of these duties and benefits could have significant tax-related repercussions for new homeowners, making it especially important for those who purchased a home and have questions about taxes, to reach out to an attorney for help. To learn more about what kinds of deductions you could qualify for as a new homeowner, don’t hesitate to call CPA, former FBI Special Agent, and dedicated Florida tax return preparation lawyer Ronald Cutler, P.A. today. You can set up a free one-on-one consultation by calling our office at 386-490-9949.