Tax Tips and Breaks for New Homeowners: Deductions and Incentives to Consider

Many new homeowners go from renting to owning because of low interest rates and tax breaks. As of July 1, 2010, however, the first-time homebuyer tax credit is no longer available. The mortgage interest deduction is also not a certainty, notes Vincenzo Villamena, CPA and managing partner of the Online Taxman based in New York. They must be large enough to be above the standard deduction, and for those in the 28-percent tax bracket, that means a dollar spent on mortgage interest will only save 28 cents in taxes. For taxpayers whose total mortgage interest payments surpass the standard deduction, they may be itemizing their taxes for the first time, which can lead to forgotten deductions. According Lisa Greene-Lewis, CPA and TurboTax tax expert, Congress extended temporary tax provisions called tax extenders. The Mortgage Insurance Premium Deduction is available to homeowners whose lender required them to buy mortgage insurance to secure the loan. New homeowners also may get tax credits for energy-saving improvements made to a house. Those who make profit from the sale of their home also may not owe taxes on that profit if they stay in the home for longer than two years and if the profit does not exceed $250,000 for single taxpayers and $500,000 for married tax payers. | Read More