Lynn D'Avolio
Century 21 North East | 801-597-2857 | lynn1@soldbylynn.com


Posted by Lynn D'Avolio on 5/15/2018

You have probably been claiming the standard deduction on your taxes up until the time you bought a home. Now that youíre a homeowner, you may want to start itemizing your deductions. Your property investment will help you to start saving money in a new way. There are many different kinds of tax breaks that are available to you. Hereís the breakdown of some of the best deductions:  


Mortgage Interest Deductions


Many times, the biggest tax break comes from deducting mortgage interest. As a homeowner, youíre able to deduct interest on up to $1 million worth of debt that was used to purchase or make improvements to your home. Each January, your lender will send you whatís called a form 1098. This lists the mortgage interest that you paid during the previous year. The form should include the amount of interest that you paid from the date you closed on the home through the end of year. 


Real Estate Tax Deductions


Youíre able to deduct the local property taxes that you pay each year from your April tax forms as well. If you pay your property taxes through an escrow account, youíll receive a statement from your lender. If you happen to pay your taxes directly, however, youíll need to keep good records. You may have also reimbursed the seller for taxes that were paid on the home in the year you purchased it. This can be be included on your real estate tax deduction form. Payments into your escrow account cannot be deducted, as these are just set aside for future tax payments. 


Mortgage Insurance Premiums Can Be Deducted 


If you make a down payment thatís less than 20% of the home purchase price, you may have to pay monthly premiums for mortgage insurance. This is an extra fee that protects the lender if the borrower defaults on the loan. The good news is that these premiums are tax deductible. 


Home Improvement Projects May Be Deductible


You should save your receipts for all of the home improvements that you make throughout the year. This can be anything from windows to landscaping to new energy efficient heating systems. While you may not be able to make these deductions right away, if you make a large profit when you sell your home, the IRS could tax you. Youíll want these deductions available to you if this happens to save money.   


Energy Saving Homes Get Deductions Too 


Any energy saving home improvements that you make can give you an additional tax break. You can earn tax credits worth up to $500. Tax credits are more valuable than deductions since credits actually reduce your tax bill dollar-for-dollar. Other improvements work on a percentage-credit based on the cost of the improvements and the type of project that was done.        




Categories: Uncategorized  


Posted by Lynn D'Avolio on 2/18/2014

One benefit of owning a home is that come tax time, there are a variety of things you can claim deductions for. Whether you have someone prepare your taxes for you, or do them yourself, it is good to know all the types of deductions you can take to ensure you lower your taxes as much as possible. First things first, in order to take advantage of the deductions you will likely need to itemize, which is a bit more complicated than the EZ form you previously used. Whether you file a single or joint tax form, you get an automatic deduction for yourself. But when you itemize, you often make out better with a higher overall deduction. Each year, the various deductions change, so it's always good to keep your eye open around tax time for updates for the tax year. A quick Google search can give you some places to start. Even deductions that have been around for a long time can change on the specifics, so make sure you stay informed! Here are a few deductions that are standard:

  • Mortgage interest paid in the tax year,
  • Points you paid on your mortgage,
  • Property taxes paid including any that were prepaid and listed on the settlement sheet when you closed on your home,
  • Energy efficient improvements (there are only specific items that this can be used on and can vary year to year),
  • Medical expenses more than 7.5% of the adjusted gross income (this one is scheduled to increase to around 10% in 2013, making it harder to meet)
As mentioned earlier, deductions can change each year. In past years you were able to deduct energy efficient home improvements such as adding insulation, or there were incentives for being a first time home buyer. You never know what other deductions may pop up, so it's always worth saving receipts just in case!  




Categories: Money Saving Tips