You finally have your dream home, and now tax season is upon us. Don’t let the stress of being a first time homeowner get to you! Here are some tax tips to help ease the pain of tax season
• Keep your records! Make sure you are keeping careful records of your income, expenses, and to support deductions and credits.
• If you sold a home in the past year, you can claim selling costs. These costs include title insurance, advertising, and real estate broker fees.
• Private Mortgage Insurance (PMI) is deductible. Homeowners who make a down payment of less than 20% are usually paying some sort of Private Mortgage Insurance. If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction.
• If you moved due to a job change, you may be able to deduct your moving expenses. You must meet all of the requirements: moving expenses incurred within 1 year of the new job location, your new job must be 50 miles farther from your former home than your old job locations was, and you must be working the new job for 39 weeks after you have moved. Please see the IRS page for more info http://www.irs.gov/pub/irs-pdf/p521.pdf
• Itemize your mortgage interest, any points connected with your loan, property taxes, and deductible expenses on Schedule A of the Form 1040.
• You can deduct real estate tax charged by your state and local government.
• Sales taxes are deductible. Deductible sales taxes may include sales taxes paid on your home, or home building materials.
• You can deduct your mortgage interest if your itemize your deductions, but you can also deduct the interest that you paid at settlement if you itemize your deductions on Schedule A (Form 1040).
• Mortgage interest credit. The Mortgage interest credit is to help lower-income individuals afford a home. If you qualify you can claim the credit on Form 8396. You could be eligible for the credit if you were issued a Mortgage Credit Certificate (MCC) by your state of local government. It is only issued in connection with a new mortgage for the purchase of your main home.