Tax Advice For HomeownersAfter buying your house you realize how much of a big expense it is. Sure, it’s an investment but we’re sure you didn’t know how much it was really going to cost you, especially if it’s the first home you own. There are property taxes, higher utility bills, maintenance and repair and the list goes on. However there are few tax savings you can benefit from by owing your home instead of renting one.
According to Trulia.com, the real estate search engine, most homeowners can deduct interest paid on their mortgage as an itemized deduction on the Internal Revenue Service form 1040, Schedule A. These deductions reduce your adjusted gross income when computing your taxable income. And because the interest is a big part of the monthly mortgage people pay as homeowners, it becomes a big tax break. If you’re mortgage is higher than $1 million or your home equity loan is more than $100,000 then this rule doesn’t apply to you. If you decide to itemize your deductions, with the IRS, you may also be able to deduct your mortgage points in full the year the year they were paid.
According to Trulia.com, you can also claim real estate taxes as an itemized deduction on that same IRS form, 140 schedule A. To find out how much you’re paying in taxes, find out with your escrow account by asking your lender. If you don’t have enough deductions, you can add some of the property taxes to the standard amount under a new 2009 law. Single homeowners can add up to $500 and married couples filing together can add up to $1000.
Moving expenses can also be deducted if you’re move is a work-related move also known as a relocation. If you landed a new job and your employer is asking you to relocate, you may able to deduct your moving expenses. The form you’ll need from the IRS is form 3193, it will help you calculate how much you can deduct so you can use that number on form 1040. To qualify for this, your new job location has to be 50 miles further from your old home. You also need to have worked full-time for your employer at least 39 weeks in the first 12 months after your move. For more information Topic 455-Moving Expenses from the IRS can help.
When you sell your home, if you owned your home for more than five years and lived in it for at least two of these five years, you can enjoy great tax benefits. If you’re a single homeowner, you can get up to $250,000 tax free and if you’re a married couple filing your taxes together, you can get up to $500,000 tax free.