6 Important Tax Tips for Homeowners

For tax year 2013, the standard deduction is $6,100 for single Americans and $12,200 for those married and filing jointly. One of the most common ways to get over the threshold is to own a house and unlock the many deductions that come with homeownership. Claiming mortgage interest is the biggest deduction, and one of the most common deductions among taxpayers. “It’s evolved over the last 10 years, but we now have a cap of $1.1 million in mortgage debt that we can deduct for tax purposes,” says Monica Rebella, a certified public accountant in California. This includes first mortgages, as well as mortgages on second homes. In addition to mortgage interest, private mortgage insurance is also deductible. Also worth noting is that local and state property taxes can also be itemized on federal tax returns. Particularly for lower-income Americans, there may be special property tax benefits available based on your community. Unless Congress extends existing tax credits for residential energy efficiency, 2013 is your last chance to claim up to $500 in green energy credits. “Insulation, energy efficient windows and doors, high efficiency air conditioner and heaters — we still have credits for those,” Rebella said. A separate and more substantial credit is available for solar energy installations, so long as they are on your primary residence and not a rental property. Cancellation of mortgage debt is a very important part of filing your tax return and shouldn’t be overlooked. That’s because if you fail to report the debt forgiveness, it could result in a big change to your overall tax liability and hefty penalties from the IRS. For homeowners who have taken advantage of a resurgent housing market by selling their homes altogether, there are also tax implications. If you sold a home in the past year, costs including title insurance, advertising and real estate broker fees can also be claimed on your return. You can also claim certain repairs to reduce your capital gains on the sale, presuming they were made within 90 days of the sale and clearly for the intent of marketing the property. | Read More