It’s Tax Day, and while you’re frantically double checking your forms to make sure you got every single deduction, don’t forget that there are a slew of tax benefits to being a homeowner. We scoured the IRS site and the web to compile this list of deductions many homeowners can claim. For a more exhaustive list, check out this “Taxopedia” from Kiplingers.
For a the top 10 deductions for homeowners, jump!
1. Mortgage Interest: If you have a balance of $1 million or less on your mortgage, you can deduct the interest paid on that loan if it is your primary residence.
2. Mortgage Points/Origination: Realtor.com says if you purchased or refinanced a home in 2013, you can deduct the points or origination fees paid on that loan. “On a home purchase loan, taxpayers can deduct the entirety of points paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance,” according to Realtor.com.
3. Capital Gains with No Income Tax: A seller-owned and occupied home sold in 2013 may qualify for this tax benefit. Once every two years, homeowners can realize a tax-free profit of $250,000 ($500,000 for married filing jointly) on a primary residence sold, according to a 1997 law. If you have an Adjusted Gross income of $200,000 or more, you might be liable for a 3.8 percent tax on some capital gains income, so be sure to consult your accountant.
4. Selling Cost Deduction for Real Estate: If the profit from the sale of your home exceeded $250,000 for a single taxpayer and $500,000 for a married couple filing jointly, you may qualify for a deduction of the costs incurred from selling your home. That might include repairs or improvements made while you still owned the home, as well as costs associated with marketing.
5. Energy Efficiency Upgrade Deduction: Did you install qualifying energy-saving upgrades or renovations to your home? Don’t forget to itemize them, as you can save a bundle on upgrading your insulation, installing energy efficient fixtures, or adding alternative energy sources such as a windmill or solar panels.
6. Interest on a Home Improvement Loan: Did you take out a loan to finance a renovation or an addition. If so, you can deduct the interest paid on the loan for 2013. ” On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements such as adding square footage, upgrading the components of the home or repairing damage from a natural disaster,” says Realtor.com.
7. Private Mortgage Insurance: If you paid less than 20 percent down on your home, you may be able to deduct a portion of the fees and costs associated with your PMI.
8. Home Office Deduction: Work from home, or use a significant part of your home exclusively for business? You may be able to deduct an amount relative to the costs and amortization of your property from your total tax liability. This is a bit of a tricky calculation, so be sure to check out the IRS calculator regarding this deduction. And don’t forget, Realtors, that you can also deduct the corresponding use of your car as part of your business.
9. Property Tax Deduction: This one is a major relief to Texans, who may not pay an income tax, but pay a significant portion of municipal taxes through property taxes.
10. Mortgage Forgivenes/Short Sale Deduction: Did you have a portion of your total mortgage forgiven as part of a short sale? Up to $1 million in loan forgiveness ($2 million if filing jointly) won’t be considered taxable income thanks to a 2007 law.
Of course, if you find you’ve forgotten something and need extra time to get your ducks in a row, today is the deadline to file for an extension, pushing your Federal Filing back to Oct. 15. Are there any deductions you’re taking that we missed? Let’s hear it!