DEDUCTIONS; a taxing reason to mortgage rather than rent

DEDUCTIONS; a taxing reason to mortgage rather than rent

February 24, 2017

As the April tax filing day approaches you may be thinking of how to save on your tax payment this year. If you are already a homeowner, you most likely are aware of the tax break available for the interest paid the previous year on a mortgage.  For the new home buyer, these first years represent the greatest savings since the tax paid is at its highest.

What about homeowners whose mortgage payments are older and interest payments are lower? Of course you’ll need to check in with your tax specialist for the details and to determine your eligibility, but here are few other home owner tax breaks that may save you some money this tax season:

  • The Green Credit; there are some nice tax credits for upgrading the energy efficiency in and around your home. Installing energy efficient storm doors, insulation upgrades and new windows are usually eligible as is a new energy efficient HVAC unit.
  • Renewable Energy credits; Solar and wind power can help you save on utility bills but they can also mean savings on your tax liability
  • Equity Line of Credit; loans to upgrade to those Green and Renewable Energy sources are yet another way to see possible tax savings
  • Do you work from home? As a homeowner you are entitled to a Home Office deduction!
  • You can deduct interest on a Home Improvement loan if the work done is for “capital improvements” and not just maintenance or repairs
  • Reverse Mortgage Income and Interest; Senior Citizens may discover benefits on tax day with this Mortgage product. Ask your tax preparer if this exemption is right for you

Did you buy a new home this past year? Besides taking the standard Mortgage Interest deduction, if any of these fit your situation you may be able to increase your savings:

  • If you received a Mortgage Credit Certificate as a first time home buyer you could see a substantial tax credit of up to 20% depending on the interest paid. (Your tax specialist will have the details you need to leverage this savings)
  • PMI payments; if you bought Personal Mortgage Insurance those costs may be a source of savings on tax day
  • Points; considered pre-paid interest on the mortgage, the points you’ve paid up front for that lower interest rate may yield a tax savings
  • Transfer taxes; paid on a new purchase, these taxes are usually deductible
  • The property taxes, usually paid at closing, representing your portion of the year that was due

If you moved for employment purposes or sold a home in the past year there are tax breaks you should be aware of.  Always check with your tax specialist to determine your eligibility for these and any other tax benefits you may be entitled to take.

For answers to any real estate related questions you may have your local marketing consultant can help!

 

 

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