It’s that time of the year again.
Homeowners: as you’re getting ready to prepare your tax returns, be sure to read up on these tax deductions.
After all, did you know that over a million Americans overpay their taxes by an estimated $945 million every year?
See, bet you’re glad to have found this article now.
Here are the top ten tax deductions, in no particular order of importance (they are important in their own way) you should 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. Don’t say we didn’t tell you!
3 Ways to Contact Us
- Call (800) 687-0522
- Chat Online Now!
- Get Started Online
WE WANT YOUR FEEDBACK
Put on a “Print” option to save paper and ink.
I want to know if I sell my house in 2010, and my gross profit will be about $6ooo, does the sale and/or the profit from the sale, need to be reported to the IRS / Federal Government?
and – if I did a home-based business in the home during part of 2007 and then during part of 2009 does the profit from the sale need to be reported to the IRS/fed?
reply to email address please. thanx.
Thanks for this great article. I think I have already saved some money as I refinanced with you during 2009 and have an FHA loan that I am paying PMI on and I have to check but I also believe I paid at least a point on the interest. I was unaware that some of these items were also tax deductible. Normally the publicity centers around the tax credits for new home-buyers so I really learned something and will make sure I check on those other eligible deductions.
William,
Just highlight the section you want to print, right click on it with your mouse, select print from the menu. When the print dialogue box appears, select “print selection” in the “page range’ box, then select print.
“…the government will let you realize a tax exempt profit of up to $250,000 once every two years”. Wow! Pretty sad state of affairs when we living in a time when “the government” lets us do something that they shouldn’t have any say over.
I am attempting to purchase a property out-of-state that will eventually be (in approximately 2 years when I get some loose ends tied up here) my primary summer residence (7 months of the year). I will also maintain a residence here, for use when winter conditions are severe, and for visiting relatives/friends etc. What conditions must be met to qualify a residence as “primary”? What would keep me from claiming the out-of-state residence as primary to claim the tax incentives, even though it really wouldn’t be for a couple of years?
Also, I have been in my current residence for over 5 years, but can’t afford to sell it in the current economic climate. If I can purchase the out-of-state property, will I still qualify for the $8K credit?
Tip #1, #3, #4, #6, #7 should be followed by “if the taxpayer can benefit from itemizing their deductions”. As a tax preparer I am tired of articles like this misleading taxpayers who do not have enough of these deductions to itemize. These items are only tax deductible if you can benefit from itemizing your deductions rather than taking the standard deduction.
I bought my house in 2005, do I qualify for the Home Buyer’s Tax Credit? Also, I am paying PMI. Can I claim it as deductions?
Thanks,
Johnson.
I’d like to know if I did a bunch of improvements to my home to increase the value and ended up selling it at a loss will I be able to claim that loss just llike I would have to claim the gain if I sold it for more than I paid and put into it?
Tom #5 – Amen
ANJ – #9
I’d like to know the answer to this too. Is there a way to see answers posted? I can’t find it.