6 Tax Tips for Homeowners

By on February 13, 2017

Being a homeowner is a huge responsibility and personal investment. Whether you are a first-time home buyer, a owner refinancing their loan or recent home seller, there are some important tax deductions and credits you should consider. Just a few of these tax breaks can bring you a bigger tax return.

Or course, in order to take advantage of these breaks you will need to file complicated itemized deductions. This means no more EZ forms. Time to break out that 1040 long and Schedule A form. The process might be complicated, but the IRS certainly makes up for the inconvenience.

Here are 6 Important Tax Tips for Homeowners’:

1. Mortgage Interest Deduction – Taxpayers are eligible for about $100 billion in annual mortgage interest write-offs. If you have just bought your home or have refinanced your loan, you may be able to deduct a portion (or all) of mortgage payment going towards paying the loan interest. Your lender should send you Form 1098 at the end of the year your loan was processed.

2. Mortgage Insurance Deduction – Homeowners with a high loan-to-value ratio will be required to carry some form of private mortgage insurance (PMI) until they’ve paid 20% of the equity in their home. If your adjusted gross income is less than a combined $100,000 you can deduct these premium payments.

3. Property Taxes – Yes, your local and state property taxes can be deducted from your federal tax returns. There may be further tax credits for low-income property owners based on your specific community.

4. Qualified and Unqualified Renovations – While you may not be able to deduct fixing that leaky faucet or repainting the bedroom, there are a number of renovations which qualify for tax breaks and credits. Replacing energy-efficient windows and doors on your primary residence, installing solar panels and other improvements qualify for the various green energy tax deductions. And other renovations which increased the value of your home over the $250,000 threshold may be deducted when you sell your primary residence for a profit.

5. Points and Fees – Homeowners are eligible for refunds of the broker fees (points) made to agents procuring or refinancing the home mortgage. If you have sold a home, you may be able to claim credits for title insurance, selling broker fees and advertising.

6. Moving Expenses – If you had to buy a home because you moved 50 miles or more for new employment, then you might be able to deduct some of the expenses for moving.

What is Not Deductible?

Stay organize and consult a tax professional the first time you file taxes after purchasing, refinancing or selling your home, so you can take advantage of every tax credit and deduction available. But don’t get too carried away. There are still a number of items for which you must bear full financial responsibility. You cannot receive a tax break on your principal loan payments, property hazard insurance premiums, association fees, depreciation and common repairs.

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