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7 Tax Deductions Your Home May Qualify You For

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Tax Deductions

It’s time to start thinking about tax deductions. No matter how much we wish we could avoid the heaps of paperwork and the inevitable feeling of dread that comes with tax day, the IRS waits for no man. But wait…do you own a house? There may be some tax deductions lurking in the walls of your home, so you may want to think about where you can save some money and get those tax deductions calculated into this year’s taxes. Kimberly Howell Properties is not a CPA or accounting firm and although these deductions do exist, we highly recommend you consult with someone with expertise in this area before making the decision to take any tax deductions.

Mortgage Interest Deduction – The interest you pay on your home loan is one of the big tax deductions offered to homeowners. By deducting the interest you’re paying, you can save quite a bit, especially in the earliest years of owning your house. You’ll need to itemize your deductions, but you can reap big benefits from this deduction.

Property Tax You can deduct state and local property taxes on your IRS returns.

Home Office If you have a home office that is dedicated space that’s not used for any other purpose (ie your dining room can’t serve as a dining room and an office), you may be able to deduct it as part of a home office. You can even deduct part of a room for a home office, but remember, it must be 100% office space and nothing else. You can click here to investigate and understand why a company needs management accounts.

Energy Efficient Tax Credits If you’ve added any energy efficient improvements to your home, you should talk to your accountant (view it now) or CPA about them as they may be eligible for a tax credit. The government changes these programs from time to time, so be sure you check to see what the latest energy efficiency tax deductions are.

Medical Improvements If you have home improvements for siding contractors norfolk that were made for medical reasons, there may be some tax savings in there for you. You can’t take a tax deduction for the entire amount of the expense, so check with your tax professional on this one to better understand how it is calculated.

Capital Gains Tax Often misunderstood, the capital gains tax can affect the amount you pay if you sell your home, but there are exclusions. If you’ve used the home as your primary residence and have lived there for 2 out of the five years prior to the sale, you will not have to pay capital gains taxes on the first $250,000 (that’s the gains on the sale, not the sales price) or $500,000 if you file jointly with someone.

As always, we remind you to seek the advice and assistance of a qualified tax professional when dealing with the IRS and your taxes. If you need recommendations, contact us and we can assist you in locating one that best suits your needs.

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End of the Year: Time to Start Gathering Your Paperwork

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Paperwork

At the End of the Year, Time to Start Thinking Ahead

If you bought a home in 2013, now, at the end of the year, is a great time to start gathering the paperwork you’ll need in the first few months of 2014. Some of this paperwork will help you save money in the future and everyone likes to save money! Whether it’s for income tax or property tax purposes, now is a great time to prepare the paperwork and know where you put it, since often these things get set aside and forgotten in boxes in the attic. Don’t wait for the last minute to get your paperwork sorted.

HUD-1 Settlement Sheet – This document shows the breakdown of all items paid at your closing. If you itemize your deductions (and as a homeowner you should), you may be eligible to deduct any mortgage interest and certain property taxes that you paid at closing. As always, when it comes to taxes, please consult with a qualified tax specialist to determine what you can and can’t deduct.

Homestead Exemption – While you can’t file your Homestead Exemption form until January 1st, it might be a good idea to download the form and put it in a safe place that you can find easily. If you bought the home in 2013 and are occupying the home on January 1, 2014, you may be eligible to file a Homestead Exemption for your property taxes. You can download the form here.

Other Paperwork Tips

It’s always a good idea to have all your homeowner paperwork handy. More often than not, we hear homeowners say they “think they have that somewhere,” but often they can’t remember where they put it. If you have a filing cabinet at home – use it! Some of the paperwork you should always keep track of:

HUD-1 Settlement Statement – As noted previously, this document provides a breakdown of all of the charges accrued at the closing. It can be very useful for tax purposes, but also gives you a great breakdown of the costs associated with buying your home. If you ever need to sell, you can reference this document to see what the “true” cost of buying your home was.

Survey – Homeowners lose this document all the time and it’s a shame. Keeping it safe and knowing where it is can save you about $300 if you need to sell your home. Often you can reuse your previous survey (providing you haven’t made major changes to the property) when you sell your home.

Homeowner’s Association Documents – They aren’t the most entertaining read you’ll ever have, but they do serve a purpose. They outline the rules and regulations that you’ll need to follow as a homeowner in the community. You will also need these if you ever decide to rent your home, as you are required by the Texas Property Code to give your new tenants a copy so that they know what rules they’ll have to follow.

Title Commitment/Title Insurance – If there is ever a question of proper ownership of a property, knowing where your title insurance is and who to call is pretty important! While title companies work to ensure that you are the true owner when you buy a home, there are times when mistakes are made, which is why title insurance exists. If a claim were made against your property, you would certainly want to call your insurer to get them on the case.

Hopefully, you know where all of your homeownership documents are. It’s always a good idea to keep a file set up and ready to go, should you ever need any info from it. You can also ask your agent for copies of most documents, so keep their card handy!

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