This week we’ll talk about some tax tips for the first-time homebuyer. If you’re a first-time homebuyer, or if you haven’t owned a home in the past two years, maybe buying a house, taking out a mortgage, and moving are at the forefront of your mind. With home prices still low along with mortgage interest rates, now is the time many people will consider a home purchase. Remember, your new home also offers you some tax benefits that can save you money, in addition to the joy of home ownership. Here are some of the different types of deductions available on your federal tax return because you own a home:
Mortgage Interest – mortgage cannot exceed the value of the home. If so, then the excess mortgage is considered investment interest. And mortgage interest deduction is only available up to certain dollar limits. (Excess mortgage, home equity line of credit, and limits on high income earners)
Prepaid mortgage interest – on original purchase and any refinance of property depending on date of the month you close.
Points or Origination Fees – deductible for points paid up front or at closing, either by you or the seller.
Real Estate Taxes – current or prepaid real estate taxes are deductible.
Mortgage Insurance Premiums – sometimes these are known as MIP or PMI. This deduction is available up through 2013.
Also remember to keep receipts and purchase documents, when buying, improving, or refinancing a home, for as long as you own the home. The expenses, or costs, prove your basis (what you paid) for the property. This will reduce or eliminate any taxes owed on profits made when you sell the house. Keep these purchase or home improvement receipts in a safe place, so you will have them to show your accountant and possibly the IRS.
Don’t delay! Schedule an appointment with our office today to find out how to maximize tax saving opportunities. We can be reached at (602) 264-9331.