Tax Deductions Every Homeowner Should Know About
This is a guest post by Tim Gilson, a ReMax Vision realtor and valued partner of Ross Mortgage.
Do you want to pay lower taxes and maybe even put a little extra cash into your bank account this year? Of course you do! The good news is that there are tax breaks available for homeowners and homebuyers alike. With tax season in full swing and April 15 just around the corner, it’s time to start organizing all of the documents you’ll need to help you claim the real estate-related tax breaks you deserve.
If you bought a home within the last year, you should have received a HUD-1 Settlement Statement at closing. This statement will show the amount of property taxes and prepaid interest you paid at closing, as well as other closing costs such as mortgage points, some of which can be used to claim valuable tax deductions. In order to claim deductions on the prepaid interest, property taxes and points you paid at closing, you’ll need to list them on the tax return for the year you paid them and opt to itemize your deductions.
You will also need to collect the substitute 1098 forms from any lenders who serviced your loans. This form shows the amount of interest paid over the year. It’s common sometimes for mortgage lenders to sell your loan to another servicer. In this case, you’ll receive more than one Form 1098 in the mail. You can use this information to claim the home mortgage interest deduction, which essentially allows you to write off the amount of interest you paid on your mortgage in the form of a deduction.
Even if you’ve owned your home for quite some time, you can still benefit from some real estate-related tax breaks in regards to mortgage interest and property taxes. In order to take advantage of both of these deductions, you’ll need to itemize your taxes.
As a homeowner, you also have the ability to deduct the amount of money you pay in local city and/or state property taxes from your taxable income. To do so, you’ll need access to your property tax statements.
Filing taxes properly can be a confusing feat. If you’re a homeowner, check with a certified tax professional to see what deductions or credits you qualify for, and remember to bring all of the necessary forms of proof to your appointment. Doing so might help you pay lower taxes this year and save money in the process.
With more than 12 years of experience in the real estate industry, Tim Gilson brings a wealth of knowledge to his role as a real estate consultant at ReMax Vision. He holds important certifications, including the Accredited Buyer’s Representation (ABR), Certified Residential Specialist (CRS) and Certified Distressed Property Expert (CDPE) designations, and is a member of The Institute for Luxury Home Marketing.
Tim currently resides in Pleasant Ridge, Michigan, and holds a Bachelor Degree in Engineering and a Master’s Degree in International Business. His experience working in countries around the world has led to an appreciation for studying languages and assisting clients who are buying in the US for the first time.