One of the best perks of being a homeowner is taking advantage of the tax breaks. If you are not aware of the tax breaks, then you won't reap the benefits. You need to know what expenses you can deduct and how new laws affect you. Below are the top 10 tax tips that every homeowner should know. Remember to always consult with your tax advisor.
- You can deduct your mortgage interest and real estate taxes. You can deduct up to $1 million of the interest paid on a principal residence and a second home. All of the property taxes are deductible.
- If you purchased the home this year, you can deduct the money paid for points or origination fees.
- If your adjusted gross income is $100,000 or less, you can deduct your PMI insurance. This is deductible for loans that originated after December 31, 2006 and before January 1, 2011.
- You can deduct any points you paid this year to refinance your mortgage, or purchase a second home or investment property. This must be done over the life of the loan.
- If you moved at least 50 miles for a new job you can deduct your moving expenses.
- If you sold your house this year, you may be exempt from capital gains tax. To be exempt, the sale of your house must be under $500,000 for a married couple and $250,000 for a single couple.
- Home improvements and mortgage costs are not tax deductible, but you can use them to offset your capital gains tax burden when you sell.
- If you did a short sale, you can exclude the debt forgiven by your lender from your taxable income.
- If you make energy efficient updates to your home, you can receive energy efficiency tax credits.
- If your home was damaged by an unexpected event, such as a fire or natural disaster, you can deduct a portion of your loss not covered by insurance.
This year, first time homebuyers can add #11 to the list - there's the $8,000 tax credit. In certain cases, this can even be used to help with your downpayment. Don Wenner can help you find a home, so you can benefit from the tax deductions. Call Don today and check out his Lehigh Valley website to view his great selection of homes in Bethlehem and other Northampton county cities.