Are you a homeowner? We are sure that it must feel great to finally have a place that you can call your own. The real estate market has improved, and in recent times, there are many people who have become homeowners. Since you have so newly acquired this title, you may not be aware how this can affect your taxes.
Owning a home has an influence your taxes, and in a good way. This is because there are so many home expenses that you can utilize as deductions. And you know what that means? You will pay a lower amount in taxes now. And the best part is that these deductions are valid whichever type of home you own, be it a single family residence, a condo, a town house or a mobile home.
Your mortgage payment is the biggest tax deduction that you can utilize. Most of this payment comprises of an interest amount, which is deductible. The only exception is when your home loan exceeds $1 million. By the way, even if you refinance your mortgage or take another one, this still holds.
If you paid any points to get a reduced rate on your home loans, you may use this as deduction as long as the points are within an acceptable range. You must also meet all the requirements on the home loan so that you can deduct these points all at once.
If you have owned your new residence for less than a year, you can use property taxes as deduction. When you acquired the property under your name, you must have paid half of the taxes and the seller would have paid the remaining amount. Just as you shared the taxes, you also get to share the deductions; make sure you itemize it on Schedule A.
With every good thing, there is always some bad associated. Though you do get to enjoy deductions, your taxes also get complicated at the same time. You will have now have to file your return using 1040 form and detail all the deductions on Schedule A. Still, when you consider the fact that your taxes are considerably reduced, this does not exactly serve as a disadvantage. Plus, there are so many tax accountants to help you out with this. Do take help from them if you want to gain the maximum tax benefits.