With April 15th looming in the not-so-distant future, it’s time to get prepared to file your tax returns. While no one enjoys paying taxes, we certainly do revel in the benefits of tax deductions. In addition to charitable contributions and certain medical expenses, homeowners in the United States can take advantage of several other deductions. Here is a guide to the most important homeowner tax deductions you should be aware of:
Mortgage interest is one deduction you don’t want to miss out on. If you own a home and pay a mortgage on it, you most likely qualify write off the majority of the interest paid on that mortgage or home equity line of credit. And if your mortgage was originated in the last few years and the bulk of your monthly payments are going toward interest, you stand to reap an even bigger benefit. If you own a second home that you reside in for at least two weeks out of the year – even if it is an RV or boat with cooking and sleeping quarters that you pay mortgage interest on – you can write that off as well.
Property taxes are another cost most homeowners loathe, but that surely isn’t the case during tax season. So grab a copy of your latest tax statement and be sure to itemize the entire amount you paid in property taxes for the previous year.
Those who bought or refinanced their home within the last calendar year may be able to deduct any points they might have paid in exchange for a lower interest rate. There are differences in the amounts you can claim for refinance points and purchase points, as well as equity lines and second homes, so discuss this with your accountant or financial advisor.
If you are a homeowner with a gross income of less than $109,000 who pays personal mortgage insurance (PIM or PMI), there’s a good chance you can deduct at least some of the amount you paid. This is another item you should discuss with your accountant.
In addition to enhancing your home’s appearance and value, home improvements have other financial benefits. That’s because interest paid on home improvement loans and costs incurred for certain energy-saving home improvements such as windows, doors, boilers, furnaces, and even insulation can be written off.
Don’t forget to speak with your accountant or tax consultant for more information on these deductions, and to find out if you qualify for any others. Happy filing!
We hope you found this article helpful. For more useful tips, visit the Cliffco Mortgage Bankers Know-How Center