Tax Tips for Homeowners
When it comes tax time, knowing what is rightfully yours to claim is crucial. That is why it is important to know tax essentials before tax time comes around instead of during. Since there are all sorts of rules that apply to different areas, such as if you have children, if you own a home, and so on, you need to know what applies to your situation. If you do own a home and you want to get the most reductions out of it, here are some of those essential tips and tricks you’re going to need to know.
Itemize Return to Claim Deduction
Unfortunately, about 40% of homeowners will miss out on a major tax advantage when they fail to itemize their income taxes. If you have a home and somewhat of a simple return, it can be tempting to take just the standard deduction but, it could be that your homeowners deductions are more beneficial to you.
The Home Office Deduction
The average home office deduction is about $3,500 according to the Small Business Administration. If you take that number and then multiply that by your tax deduction bracket that is how much you may be able to save. Don’t forget to take advantage of your home office and deduct the appropriate taxes.
If you happened to have purchased or refinanced your home in the last year, don’t forget about those expensive closing costs. On your return you can also include those fees and discount points that were paid when you closed or refinanced. Actually, even if the seller paid your closing costs, it is still tax deductible.
It is also important to note that the IRS is not currently charging for taxes for the Cancelation of Debt Income through a short sale, loan modification, or foreclosure . Unless this changes, which is under the Mortgage Debt Forgiveness Relief Act of 2007, this is important to keep in mind come tax time.
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