Whether you’ve just settled into a new home or you’re about ready to take the plunge into homeownership, tax time is upon us and it’s important to educate yourself on the tax benefits of owning a home. Here are the top 3 easiest ways to get a credit on your taxes.
1. Mortgage Interest: This is the most traditional way to get a tax break. If you’ve purchased your home with a mortgage loan, the interest that you’ve paid over the course of the year is tax deductible. The total you paid in mortgage interest is on Form 1098. Use the total when you complete Schedule A when itemizing your deductions. If you have a second home, the tax benefit is also available on that home as well.
2. Points: If you paid for points when you took out your home mortgage, you can apply for a tax deduction. You usually can’t deduct the full amount, but rather a portion of the points each year over the life of the loan.
3. Property Taxes: The annual amount you pay in real estate taxes is also considered tax deductible. In a mortgage payment situation, you typically pay these taxes in advance (or escrow) vs. waiting until the end of the year to pay as a lump sum. You can look on your mortgage interest statement to see how much you paid. If you just purchased a home this year, look closely at your statement because you will be eligible to deduct any real estate taxes that you paid at settlement.
For additional tips you can visit the Turbo Tax site or talk to a CPA. We aren’t accountants, just movers who want to make sure you’re prepared for the tax season ahead. If you should have any questions about an upcoming move, please contact us.
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