Give Me A Break! …On My Taxes
If you don’t know what to look for when it comes to taxes, you might miss some tax breaks from owning your home. Read on to save some money…
The housing market may go up and down but even with the fluctuation there are still many people entering home ownership status.
Kudos to you, if you are one of the 64% of Americans who own homes.
You may know how to plant award-winning rose bushes or know the difference between eggshell and off white paint, but do you know how to maximize your taxes to get some extra cash?
Many expenses you incur for your home are TANGIBLE tax deductibles! These deductions will work with any type of residence;
- mobile home
However, this perk doesn’t come without a price. If you want to take advantage of these tax breaks, be prepared for your taxes to get a little more complicated. No more easy forms for you! Welcome to the world of itemizing. Itemizing is a fancy word for detailing your expenses. Depending on the tax payer’s situation, in some instances utilizing the standard deductions is the better option.
So, let’s get down to it…if you will be itemizing, here are some suggestions and tips to help you get the most out of your property.
- Mortgage Interest
Your monthly mortgage payment is the item that will give you the most major tax break. Usually, the largest portion of that payment is allocated toward interest and mortgage interest is fully deductible. This is true for most homes, not including a mortgage over a million dollars. There are limited deductions for a mortgage of this size. Tax benefits even apply to refinanced mortgages and loans.
You may not know this, but a second home mortgage can be deductible as well. This additional property can be a water craft or even a recreational vehicle as long as it meets certain functional requirements (facilities designated to cooking, sleeping, etc.) and specific amount of time residing on the property.
Property taxes on your home are deductible as an itemized expense. Some monthly payments include the tax portion to be allocated for payment once a year. You can find this information on your annual statement.
- Selling Your Property
If you are selling and will make a profit of up to $250,000, this amount is not taxed. However, again, some requirements need to be met and penalties may apply depending on how long you owned/lived in the home.
- Unforeseen circumstances
No one wants to think about hardship or tragedy in life, but there are some situations that can result in a tax break for a home owner. These include, divorce or legal separation, losing a job or fluctuations in employment resulting in the lack of ability to pay the mortgage, and even death.
- What isn’t tax-deductible
There’s a saying: “what goes up must come down”. Well, even though it’s great to have the ability to take advantage of these tax breaks, there is a down side as well. As a home owner, you do have nondeductible expenses like
- association dues (if applicable)
- closing costs
- and home repairs
So, there you have it. There are quite a few tax breaks that go along with being a home owner. So…. maybe April 15 doesn’t have to be nerve wracking afterall!