Tax Season is Here ~ Review your Homeowner Tax Advantages

One of the advantages of owning a home is that it can reduce the amount of income tax you pay every year.
With tax season here, prepare all your documentation in advance to factor in all your tax advantages.  Here is a list of benefits for homeowners:
  • Home Buyer tax credits:  You are entitled to a tax credit of up to $8,000 if you purchased your first home before April 30, 2010. Anyone  who owned and home and sold it to purchase another before April 30, 2010 is eligible for a federal tax credit of up to $6,500.
  • Loan fee deductions: Certain requirements need to be met to qualify for prepaid interest deductions when purchasing or refinancing a property. However, you may deduct points, origination fees and loan discount fees, even if the seller paid these for you.
  • Property tax deductions: In addition to deducting the property taxes you pay each year, you are entitled to deduct the taxes you paid at the closing table in the year you purchased a home.
  • Mortgage interest deduction: You may deduct the amount of interest including late charges you pay on your mortgage and home equity loans. If your down payment was less than 20% you may also deduct private mortgage insurance premiums as interest expenses.
  • Selling your home costs: You may deduct the costs related to the sale of your home (in the year you sold it), such as real estate commissions, title insurance, legal fees, advertising, administrative costs and inspection fees. This includes decorating or repair costs incurred in the 90 days before the sale of your home.
  • The gain on you home: The government allows you up to $250,000 (double for married couples) of profit on the sale of your home tax free. However, this does not apply to rental property or second homes. You are also allowed to subtract any amounts you spend on improvements, and in 2010 you can receive tax credits for making energy saving upgrades to your home. Money invested for routine maintenance doesn’t count. 
         Remember….. Consult with your tax professional about tax laws to be sure your are following the rules.
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