Tax Tips for Home Owners

    Tax Tips for Home Owners

    Feb 05, 2018

    With tax season upon us, here are some quick tips that could reduce your taxes this year. Don’t forget to check with a trusted tax adviser to make sure you qualify for each deduction.

    1. Mortgage Interest Deduction: Primary Home AND Second Home
    2. Must have a “Qualified Home
    3. IRS defines Qualified as -  “a main or second home that is a house, condominium, cooperative, mobile home, house trailer, boat (yes boat!) or similar property that has sleeping, cooking and toilet facilities.”
    4. Must have a property loan (purchase a home, second mortgage, a line of credit, or a home equity loan) secured by a mortgage, dead of trust, or contract for deed.
    5. Non-rented Second Home: treat this home as a qualified home (you don’t even need to visit this home in the tax year!)
    6. Rented Second Home: as long as you stayed for at least 14 days OR 10% of the number of days the property is rented out, it qualifies!
    7. Mortgage Interest Deduction: Rental Property
    8. Usually if you rent a property you will use the mortgage interest as an itemized deduction
    9. Closing Costs/Points Deduction
    10. These are costs paid when you purchase a property or refinance your mortgage.
    11. Third Party Fees Not Included, i.e. appraisal fees, recording fees, commission etc.
    12. Prepaid Interest can be deducted! i.e. origination fees, discount points, etc.
    13. Property Taxes
    14. State property taxes are deductible on your Federal Income Tax IF you itemize
    15. NOTE: The amount you are able to deduct will change in 2018.
    16. Mortgage Insurance Deductions
    17. Borrower-paid mortgage insurance premiums are tax deductible as an itemized deduction!
    18. Not deductible on second homes or rental property. Sorry!
    19. Capital Gain Exclusion
    20. If you made a profit from the sale of your main home you may be able to exclude that profit from your taxable income
    21. Individuals can exclude up to $250,000 from the sale of their main home as long as they have lived in that home for 2 of the last 5 years. Those years don’t even have to be consecutive.
    22. Exceptions to the two year rule (make sure you document these exceptions!)
    23. Change in Job Location
    24. Health Concerns
    25. Unforeseen Circumstances

    Hopefully one of these tax tips will help you out this tax season!

    DISCLAIMER!! I am not a tax professional. Make sure you check with your tax adviser to maximize your deductions!