With 2010 behind us, there are many tax related considerations for those fortunate enough to have bought last year. From property taxes to income taxes and even home buyer tax credits- purchasing a home can have a huge positive effect on your tax bills.
Property Taxes
The start of a new year always marks the imminent deadline to file for homestead exemptions in Florida. Here in Central Florida the exemption can add up to $700/yr or more of savings, but it's important to know how and when you can file.
Each County in our area has a different procedure for filing so you will want to check with your local Property Appraiser office. The links for the various counties are:
You must file by the end of February to receive the exemption for 2011 and remember you must have purchased your home in 2010 to qualify, and the home must be your primary residence.
Chances are your tax payment is escrowed (included with your mortgage payment) if you have financing. It's important to note that if you fail to file homestead your monthly payment will not immediately increase, but it will take an inordinate jump a year or more later. This jump in your monthly payment can easily exceed $100/mo so to avoid a costly mistake, make sure you file on time.
The documents usually required to file are your recorded deed, tax bill or property record card; Social Security Numbers for applicants and spouses; Florida Driver's License or if you do not drive Florida Identification Card; Florida Vehicle Registration; and your Florida Voter's Registration Number. Again some counties may have different requirements so check their websites.
Don't forget if you had a previous homestead in Florida you may qualify to transfer some of the "Save our Homes" benefit to your new property. Amendment 1 passed on January 29, 2008 allows "portability" of certain tax benefits from a previous homesteaded property, even if it hasn't been sold. For more information about this check your local Property Appraiser's link as well.
Federal Income Tax
Remember that mortgage interest is generally still tax deductible (make sure you talk to your tax preparer!) and some other costs associated with a mortgage may be deductible as well. Advise your tax preparer that you purchased a home and provide them with your HUD1/Closing statement to maximize your potential write offs.
Homebuyer's Tax Credit
Many of you qualified for the tax credit but did not file or amend your 2009 return to receive it. Your payday has arrived! For most people this credit of up to $8,000 was contingent on having your contract dated by 04/30/10 and your purchase closed by 09/30/10. Service members who were on official extended duty outside of the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, may qualify for a one-year extension.
You tax preparer will have the proper form for you to complete or you can access the IRS site here to download it. For more information on the tax credit, how it worked and if you may still qualify access this site from the National Association of Home Builder's here.
Buying a home can have many tax advantages as long as you do your part. Don't lose out on the money you can save just because you didn't take action!
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