It's hard to believe we're halfway through February 2016. By now, everyone should have their W-2's or 1099's and starting to think about income taxes that will be due in less than two months time. Your home may be brimming with tax advantages. How will you get all of the breaks you're entitled to? You should always consult a professional tax advisor for details, but here's a list of the top 10 tax deductions:
1. Mortgage Interest Interest on the loan for your primary residence is fully tax-deductible, if you qualify.
2. Points Paid on a Refinanced Loan If you refinanced, you may be able to write off the points paid for the new loan.
3. Points Paid on a Purchase Loan The points you pay at closing when you buy a home are deductible on your income tax statement for that year.
4. Capital Gains with No Income Taxes Thanks to the 1997 Tax Act, once every two years, single homeowners can realize a tax-exempt profit of up to $250,000 - as long as the seller owned and occupied the home as a principal residence during any two of the last five years. Married homeowners who file jointly on their tax returns do not have to pay taxes on up to $500,000 of gain when they sell their primary residence.
5. Home Improvements Although you can't deduct the expenses associated with home improvements, keep in mind that making improvements to your home may increase the purchase price of your home. Keeping all of your receipts from home improvements may help you prove your home's worth at resale and reduce the potential taxable gain when selling your home.
6. Real Estate and Property Taxes State and local property taxes can be deducted as an expense against income. However the real estate taxes are only deductible in the year they are actually paid to the government.
7. Home Offices If you have a qualified office in your home, you may be able to deduct costs associated with maintaining the portion of your home exclusively used for business.
8. Limited Moving Expenses Homeowners who have recently relocated for work may be able to write off the cost of moving themselves, their household goods, their vehicles, and other reasonable costs associated with the move. Restrictions do apply.
10. Buying a home First-time homebuyers can take out up to $10,000 from traditional and Roth IRAs penalty-free to help with purchasing the home. Spouses, parents, children or grandchildren can add another $10,000 from their IRA accounts for a total of $20,000 for a down payment.
Because tax rules vary based on income and other factors, you should always consult an accountant or financial advisor for advice on your particular tax situation.
If it's time for you, or someone you know, to become a homeowner or sell a home to take advantage of the tax benefits ... Contact Us today. We'd love to help you!