7 Homeowner Tax Advantages

Real Estate Agent with eXp Realty LLC BK 3126272

Owning a home can be a real help at tax time because it generates deductions that may reduce the income tax you owe.

Here are seven tax benefits for homeowners.

1.  The mortgage interest deduction

Every year, you can deduct the amount of mortgage interest and late charges you pay on your mortgage and home equity loans, though there are limitations. Find out more in IRS Publication 936.

If you were required to purchase private mortgage insurance (PMI) because you made a downpayment of less than 20% on your home, you can also deduct those premiums for your 2014 taxes.

2.  Deductions for home loan fees

Typically, you can deduct the prepaid interest you paid in the year you took out your mortgage loan. That includes points, loan origination fees, and loan discount fees listed on your settlement statement, even if the seller paid those fees for you.

If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.

When you refinance your mortgage to get a better rate or shorten the term of your loan, you can deduct prepaid interest fees, but you typically have to spread the deduction out over the life of your loan.

You must meet certain requirements to take the prepaid interest deductions when you purchase or refinance your home. Check with your accountant to be sure you’re following the rules.

3.  Property tax deductions

In the year you purchase your home, you’re entitled to deduct the real estate taxes you paid at the closing table. You can continue to deduct the property taxes you pay each year.

4.  Home office expenses

If you have a home office you use only for business, you may be able to claim a standard deduction of up to $1,500 per year based on $5 a square foot for up to 300 square feet. Or you can do a more complicated calculation outlined in IRS Form 8829.

The government scrutinizes home office deductions closely. Be sure you’re entitled to the deductions before claiming them.

5.  The costs of selling your home

In the year you sell your home, you can deduct the costs of selling it, including real estate commissions, title insurance, legal fees, advertising, administrative costs, and inspection fees.

You can also deduct decorating or repair costs you incur in the 90 days before you sell your home. See IRS Publication 523 for more information about the home sale deduction.

6.  The gain on your home

If you lived in your home for at least two of the previous five years before you sell it, the government lets you to take up to $250,000 of profit on the sale of your home tax free. That amount is doubled for married couples. This deduction isn’t available on rental or second homes, the IRS explains in Publication 523.

The government also allows you to subtract from your home sale profit any amounts you spend on capital improvements, such as window replacement, siding, or a kitchen remodel. Money invested for routine maintenance and repairs doesn’t count.

7.  Solar panel system tax credit

Adding solar panels to your home cuts your electricity bill, but it can also cut your federal taxes if you can take the Residential Energy Tax Credit. Breaks are also available for wind turbines and geothermal heat pump systems.

Posted by

Maggie Dokic - Broker/Owner - Special Miami Homes

What's My Home Worth? Instant Response!       Search All Miami Homes - Updated from MLS Daily!

For more information on our local real estate market, or to see or sell a home in Miami, Palmetto Bay, Pinecrest, Coral Gables or the Redland, visit our Miami Real Estate site or contact us at Team (at) SpecialMiamiHomes (dot) com.

The opinions expressed herein, are those of the author, and not necessarily of  Special Miami Homes.

None of this information is to be deemed legal or financial advice.  Please contact your attorney or accountant for same.

Page copy protected against web site content infringement by Copyscape


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Real Estate General Information
Florida Miami-Dade County Pinecrest
Posts to Localism
buy sell

Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Maggie Dokic | Miami, FL | 305.81.HOUSE (46873)

GREEN, CDPE, SFR, Pinecrest | Palmetto Bay |
FREE list of all foreclosures in Miami-Dade County!
Spam prevention