LOVELAND – It’s tax time! As a homeowner, there are several different home-related expenses that you may be able to deduct on your taxes if you itemize deductions. Below are a few common deductions to keep in mind.
The interest portion of your mortgage payment is tax deductible. You should receive a form from your mortgage company detailing exactly how much interest was paid on your loan last year.
PMI (Private Mortgage Insurance) is tax deductible for homeowners who qualify. Only homeowners whose income is below a certain threshold and who obtained their loan during a certain timeframe may use this deduction. Check with your tax preparer
Property taxes are another common tax deductible expense. The amount paid may appear on your mortgage statement, although you should verify that the amount is correct as the mortgage company bases their figure on the date the taxes were paid which may or may not match the actual tax period.
Some home repairs/upgrades may be tax deductible if they improve the energy efficiency of your home. Examples are replacement doors, windows and heating systems. Bring receipts for these expenses to your tax preparer. Keep in mind that there are both yearly and lifetime limits for
If you own an investment property, you may be able to deduct the following additional expenses:
• Property insurance
• Property repairs and upgrades
• Common utilities
• Marketing fees
• Property management fees
• Broker fees
• Legal and professional service fees
Keep receipts related to any of these expenses and provide them to your tax accountant.
If you use your property for business use (i.e. a home office), keep receipts on all expenses related to your home including mortgage interest, taxes, insurance, home repairs/upgrades, and utilities. Your accountant will help you determine what portion of these expenses may be included in your taxes.
New mortgages & refinances or home sales
If you obtained a new mortgage, refinanced an existing one, or sold your home, keep a copy of your settlement statement. Certain expenses paid at closing may be tax deductible. The most common examples of this are points (pre-paid interest) and taxes.
It is a good idea to keep any paperwork related to home sales/purchases and expenses. Items that qualify for tax deductions will depend on whether you own a primary residence or investment property, your income bracket, and other similar factors. Your tax accountant will be able to evaluate your financial situation and determine your eligibility. By providing your accountant will all of the necessary information, you can be sure to get the maximum tax deduction allowed.
This information is intended as a general overview and should not be construed as legal tax advice. Always consult with your tax accountant for the most updated tax information and guidance specific to your situation.
Suzanne Plewes is a Broker Associate at RE/MAX Alliance in Loveland. If you have questions regarding real estate, please write to 750 W. Eisenhower Blvd., Loveland, CO 80537, call 970.290.0373 or e-mail [email protected].