Tax time can be a very confusing time for homeowners! Luckily, Chris Carmichael from Carmichael, Brasher, Tuvell & Co. has you covered! Contact Chris at ccarmichael@cbtcpa.com or 678-775-5461
Buying or selling a home can be expensive. Luckily, the IRS allows for tax deductions for some of the major costs associated with a home. The following items are just a few things to consider when doing your 2013 taxes.
Home Mortgage Interest
Home Mortgage Interest you paid on your primary residence is tax deductible! If you paid at least $600.00 in home mortgage interest you will receive a 1098 from your lending institution. This form will report the total amount of Home Mortgage Interest you paid during that tax year and you can deduct this on Schedule A of your 2013 individual tax return.
Points Paid
Some homeowners pay mortgage points to reduce their interest rate when purchasing a home. These points paid can usually be found on your settlement statement. These points may be fully tax deductible in the year in which you pay them, or amortized over the life of your loan. Points can be deducted on Schedule A of your 2013 individual tax return.
Mortgage Insurance Premiums
Were you required to pay home mortgage insurance premiums? Well these premiums may be deductible in full on your 2013 individual tax return. In general, these premiums are fully deductible on Schedule A of your individual tax return. The dollar amount you paid can usually be found on the 1098 that you received from your lending institution.
Primary Residence Property Tax
The property tax you paid on your primary residence will be tax deductible in the year in which it was paid. This property tax is usually (not always) paid through your monthly mortgage payment. If this is the case then you can find the total property tax paid on your residence reported on your form 1098. This property tax is deductible on Schedule A of your individual tax return.
What if my 1098 doesn’t show property tax and I know I paid it through my mortgage payment?
Most counties now have online property records. You can search for your county’s property record/tax commissioner website and then locate your property by address, owner, or parcel ID number. This will give you a history of the property tax bill and amounts paid.
I sold my primary home this year, what if I have a gain on the sale of my home is that taxable?
The IRS allows for a $250,000 gain exclusion ($500,000 if you are married filing jointly) on the sale of your primary residence. In general, to qualify for the exclusion, you must meet both the ownership test and the use test. You are eligible for the exclusion if you have owned and used your home as your main home for at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. Generally, you are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
These are just a few of the major items to consider when doing your taxes after buying or selling a home. Whether you use turbo tax, a CPA firm, or another method to do your taxes please educate yourself on what items are and are not deductible.
Please note, this post is for informative purposes only, please seek the advice of your tax professional to verify what transactions and amounts are tax deductible on your tax return.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.