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10 often overlooked tax deductions

By
Real Estate Agent with Amanda Realty Group (Alexander Realty)

 

Deduct prorated mortgage interest in the year of property purchase or sale.

Similarly, if bought a residence

and took over an existing mortgage, don't forget to deduct your prorated interest share for the month of the

sale. Your closing settlement statement shows your prorated share of mortgage interest.

10 Often Overlooked Real Estate Tax Deductions

 

 

1 Home acquisition mortgage loan fees. If you have bought a primary or secondary home in the past year,

you probably obtained a mortgage to finance the purchase. That mortgage is called an "acquisition

mortgage" because it enabled purchase of the residence. If you paid a loan fee to obtain that acquisition

mortgage, usually called "points", that loan fee qualifies as an itemized interest deduction. Each point paid

equals 1 percent of the amount borrowed.

2 Home improvement loan fees. Similarly, if you paid a loan fee to obtain a home improvement loan, that loan

fee is fully deductible in the tax year it was paid.

3 Loan fees paid to refinance a home loan (or borrow against other real estate). If you refinance your existing

home loan, or borrowed against other real estate such as an apartment building, any loan fee you paid must

be deducted over the life of the mortgage.

4 When refinancing, deduct any undeducted loan fees. Thanks to low mortgage interest rates, many

homeowners refinanced again after previously refinancing a year or two earlier. These homeowners should

remember to deduct on the income tax returns any undeducted loan fees from a prior mortgage refinance.

5 If you bought or sold property in the past year remember to deduct prorated real estate taxes. A major tax

deduction many real estate buyers and sellers overlook is the prorated property tax they paid at the close of

escrow. Even if the other party remitted the payment to the tax collector, but you were charges a prorated

portion of the tax bill, be sure to deduct your share on your return.

6

7 Mortgage prepayment penalty. If you paid off an existing mortgage early and were charged a prepayment

penalty be the lender, that prepayment penalty qualified as an itemized deduction.

8

When land rent payment qualify as interest deductions.

Millions of homes are located on leased land.

Internal Revenue Code 163© allows land rent to be deducted like interest when the lease; (a) is for at least 15

years, including renewal periods; (b) is freely assignable; ( c) contains a present or future option to buy

the land; and (d) is like a security interest, such as a mortgage. Payments to buy the land are not deductible,

nor are ground rent payments deductible if you do not have the option to buy the land, such as in a mobile

home park.

9 Home construction loan interest. If you built a new home in the past year, or are building one now, don't

forget to deduct the construction loan interest paid. It's deductible if the construction period does not exceed

24 months before occupancy of your principal residence.

10 Deduct prepaid property taxes and mortgage interest. If you prepaid your current year's real estate taxes

last year, as homeowners do to increase their tax deductions, or if you pay your January mortgage payment in

December of the previous year, don't forget to deduct these extra mortgage interest and property tax

payments on your income tax returns.

 

 For a list of homes in your area contact me today.

Posted by

Amanda Alejandro

 

Jersey Strong Contractors
Jersey Strong Contractors LLC - Linden, NJ
203k, EPA Lead base Renovators Licensed,Home Build

Great Reminder for all the buyeers out there, little things will make  adiference

Dec 16, 2010 09:46 AM
Doug Peveto
Tempe, AZ

Even more reason to take advantage of homeownership! Great job sharing the knowledge...

Dec 16, 2010 09:48 AM