The tax deadline is fast approaching. Hopefully you’ve already filed your taxes this year.
If you are a new homeowner, were you able to take advantage of the many tax breaks that come along with homeownership? Tax breaks on owning a home range from mortgage interest deductions to home improvements. Thinking you might have missed a few of these breaks? Keep reading. Above all, we want to make sure that you are prepared for the next tax season.
According to TurboTax, here are a few tax items that you may need to pay more attention to when filing your taxes.
1.) Mortgage Interest
One of the biggest tax breaks comes from deducting your mortgage interest. Did you know that you can deduct mortgage interest on up to $1 million of debt? Which in return is used for purchasing or fixing up your home? The Form 1098 is sent to you from your lender. It lists the mortgage interest paid the previous year. Or, the amount that you will deduct. You can even deduct this amount if your lender does not include it on the 1098. Check your files to make sure you are reporting accurately.
2.) Real Estate Taxes
Similarly, you can deduct local property taxes that you pay out each year. This amount is on the form sent to you by your lender if you pay your taxes through an escrow account. If you pay your real estate taxes directly to the city, check your records for the deduction amount.
3.) Home Improvements
First of all, save your receipts. Make sure there’s a record kept of all the home improvements that you make throughout the year. Almost all of these include landscaping, storm windows, fences, the addition of energy-efficient items and more. This can apply if you’ve sold your home. The cost of the improvements is added to the purchase price of your home. In return, this is used to determine the cost basis of your home. As a result, this cost basis is used for tax purposes. Above all, helping limit a possible tax bill.
4.) Mortgage Insurance Premiums
Made a down payment of less than 20 percent of your home’s total cost? Then you’re most likely paying a mortgage insurance premium. Mortgages issued in 2007 or after, can deduct premiums. However, this tax write-off phases out as gross income adjusts. For example, this includes increases above $50,000 on married filing separate returns and above $100,000 on all other returns.
Tip: File your taxes early this year. As a result, it helps better prepare you for any bumps in the road with your filing process. Take the time to make sure that you have all of your deductions together. Work with a tax professional if you have any questions on how to get the most out of your deduction.
Note: This information is applicable to the 2015 tax year.
Do you have any tips for home ownership tax breaks? Share with us in the comments below.