I’m a Homeowner Can’t I Catch a Break
Tax season is upon us and for some that means getting a nice little check to offset some of the expenses throughout the year. For others, that means paying up to Uncle Sam. Luckily for homeowners, the government rewards those who have borrowed money toward the purchase or refinance of a home, and they are willing to refund you. I am here to help remind you of some sizeable deductions.
- Mortgage Interest – If you have a mortgage and have looked at the break down of your payment you have probably noticed that a big portion of the payment goes toward interest on your loan. Fortunately, the government allows you to recoup some of that by deducting the interest you have paid. Your loan servicer will send you an IRS form 1098; hold onto this for your accountant to add into the equation.
- Property Taxes - Another considerable write-off are your property taxes. Your mortgage interest statement should list the amount of taxes you paid if you wrap your taxes into your mortgage payment. If you’ve chosen to pay your taxes outside of your mortgage or do not have a mortgage, you may contact your local tax office for a statement and share it with your accountant.
- Points - If you have purchased a home in the last year and you have paid points to secure a lower your interest rate, or paid a loan origination fee (a fee your lender charged to do your mortgage) in 2019- its tax deductible! Many homeowners seem to overlook these deductions and we are here to remind you. Your lender should provide you with a copy of your settlement statement with the discount points and loan origination fee broken down. If your lender did not, give them a ring to retrieve a copy and provide this to your accountant.
- Home Improvements - When deciphering what you can write off when it comes to home improvements lets break it down into 2 categories; capital improvements and repairs. If you make capital improvements, you may write that off. Capital improvements are defined as a permanent structural improvement or an improvement that will enhance the properties overall value or prolongs its life. Some examples of capital improvements are an addition to the house, new bathroom, new roof, plumbing upgrades and even fencing. Examples that are not tax deductible are repairs such as painting a room or fixing that leaky faucet. Always save your receipts and present them to your accountant if you are unsure if the improvement qualifies for tax deduction.
Consult a tax professional for more information.