With less than 30 days left until April15th, many homeowners are scrambling to get their paperwork together for their tax preparer appointment. In all the frustrated and anxiety filled moments before the meeting, many homeowners may forget a few of the tax deductions they may be allowed. As a reminder, here are just a few that may help you with your income taxes this year. Be aware that before you make any of these deductions, you need to speak with a tax professional first before doing so.
1. PMI - Private Mortgage Insurance is an extra insurance that lenders require when a homeowner puts less than 20% down payment on a home. in essence, lenders would prefer an 80% Loan-to-Value, however those borrowers with an LTV higher than 80% must pay an insurance premium each month. But the good news is that Congress extended the deductions for PMI through 2010. The one restriction to this deductions is that you must have purchased or refinanced your home after January 1, 2007 and have an adjusted gross income of less than $110,000.
2. Points Paid - Deducting points that you may have paid to get a lower rate must be treated differently whether you purchased a home or refinanced. If you purchased a home last year, the points you where charged at closing are deductible on your income tax for that year. Even if the seller paid all or only some of your points you may be eligible to deduct those points also. If you refinanced last year you might be able to deduct those points also. However, you will have to deduct the points over the life of the loan, meaning a 30 year fixed loan, the points will have to be deducted over 30 years.
4. Real Estate Taxes Both State and Local - Both of these are deductible in the year actually paid.
5. Mortgage Interest - The interest that you pay on your home mortgage is usually tax deductible. Check with your tax adviser, but normally it is fully deductible for that year paid.
There are others that deal with home offices, health related improvements, capital gains, moving expenses, vacation homes and home improvements. Again, you should talk with a professional tax advisor before attempting any of these deductions.
Scott Dovala Branch Manager Ascent Home Loans
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