One thing that is sure everybody must do in our country, no matter who you are or owning a home at tax time what you do, you must pay your taxes. Taxes related to home ownership can help in lowering your tax bill, that is if you know what to do. You may want to ask how, relax as I show you how.
Mortgage interest deduction
One of the smartest decision itemizing homeowners can take advantage of is mortgage interest deduction which could be claimed on a schedule A form. Your mortgage must be secured by your home (which may be a trailer, boat or a house in as much you can sleep in it, cook in it and it has a toilet) to get this mortgage interest deduction. Interest itemizing homeowners pay on their mortgage of up to $1million ($500,000 for married filing separately) is deductible when you use the loan to buy or improve your existing facility. If you take on another mortgage, home equity loan or home equity loan of credit to improve your existing facility or buy a completely new second home everything still count towards the $1million limit.
Prepaid interest deduction
The prepaid points are also known as the prepaid interest you paid when your mortgage was being taken out and is deductible in the year you paid it. This is especially applicable to homeowners who refinance their mortgage and use the money for the improvements to their homes. The point could also be deducted if you refinance to get a better rate or reduce the length of the mortgage but usually, the deduction is always over the life or duration of the mortgage.
PMI and FHA Mortgage Insurance Premiums
It is possible to deduct the cost of PMI as mortgage interest on schedule A if you itemize your return. Though, it only applies to loans taken out in 2007, 2008, or later. On how much you can deduct, there are some conditions especially if your gross income is more than $100,000. Apart from PMI, there are Government insurance premiums that are paid at closing like insurance from FHA, VA etc. Deducting is a little bit complicated as you may need the services of a tax adviser or tax software programs.
Vacation Home Tax Deductions
Tax deductions on vacation homes can also be tricky. First, keep records of how you use your vacation homes. Mortgage interest and real estate taxes can be deducted on schedule A if the vacation home is used by only you. It means the home is not rented out for more than 14 days a year. If the home is rented for more than 14 days a year and is used by you for less than 15 days also in the year, then it is filed as a rental property and your expenses treated on schedule E.
Energy-efficient upgrades might qualify you for tax credits. They are but not limited to the following: roofs (metal and asphalt); non solar water heaters; insulation; windows, doors and skylights; biomass stoves; heating, ventilation and air conditioning.
My name is Reggie Walters of Dunes Properties of Charleston,South Carolina, Realtors. My specialty is helping you buy and sell homes and invest in Charleston and Mt Pleasant South Carolina real estate.
Please Get In Touch With Reggie today to discover how you can live in our beautiful Charleston Coastal Community.