February 16, 2016
Tax Tips For Homeowners
If we moved you in 2015, thank you for your business! Now that we are in the middle of tax season, it’s a good time to look at some ways to get the most out of that move on your taxes. Whether you sold your home or bought your first one, don’t miss out on these money-saving tips on your tax return for 2015.
Profit from your sale
Selling your home for more than you owe is a primary goal for most homeowners. Under the U.S. Tax Code on home sales, the profit you make may be eligible for the maximum exclusion. One of the requirements is that you owned and lived in the home for at least two of the last five years. The site states that a single-family home, condominium, mobile home or houseboat all qualify as a residence. Of course, there are some exceptions that you need to consider. Follow this link to take their Eligibility Test.
Selling and closing costs
Many of the costs involved with selling your home are tax deductible. These include real estate agent’s commission, legal fees, title insurance, inspection fees, administrative costs, and escrow fees. The same items on the buyer’s side associated with buying a home may be deductible. For new homeowners, mortgage points used to lower your interest rate might qualify as well. Both a buyer and seller can deduct property taxes for the portion of the year that you owned the home. And don’t forget to check on the cost of improvements you made to the home when preparing it for sale. For both parties, moving costs may be tax deductible as well.
Taxes and your mortgage
Depending on when you took ownership of your home, you most likely had to write a check at your closing to cover prepaid interest. This interest is considered part of home mortgage interest which makes it deductible on your income tax return. If your down payment was less than 20 percent of the purchase price, then you are most likely paying mortgage insurance which is tax deductible as well. Most of these home buying expenses are only tax deductible if you itemize your deductions on your federal tax return.
Your tax options are many, and we’ve highlighted only a few of the most common deductions available to homeowners. We recommend you consult your tax or financial advisor, accountant or attorney to get expert advice and take advantage of all the deductions available to you.