It’s that time of year again! A New Year means that tax season is right around the corner. Whether you do your taxes yourself or use a professional, there are some valuable deductions and exclusions if you own a home. Here are some of them:
Home Mortgage Interest
Taxpayers that have a mortgage on their property and itemize their taxes can deduct the amount of mortgage interest paid during the tax year. You will receive a statement from your lender, a Form 1098, which will show not only the interest you paid during the year but any deductible points paid as well.
Real Estate Taxes
Additionally, you can deduct the amount of property taxes that you pay in the calendar year. You must have paid them either directly to the Tax Assessor, through a mortgage escrow account, or at closing of the property. This is an annual deduction for all homeowners.
If you purchased or sold a property during the tax year, be sure to check the settlement statement for any deductible items and give it to your tax preparer as well.
Exclusion of Gain on sale of Primary Residence
The exclusion of gain from taxes is the biggest potential benefit to homeowners and the best way I know of to earn income tax-free. If you sell your primary residence at a profit, you can exclude up to $250,000 for single filers and up to $500,000 for Married filing Jointly filers from the gain on the sale of your home. You have to have lived in your primary residence for a minimum of two of the last five years before sale.
This is one of the most valuable deductions ever when you sell your house. If you have lived in your home any length of time, most likely you have experienced significant appreciation on your property. Used wisely, this exemption can be used again and again, there is no limit. You do not have to purchase a new home or do anything other than make sure you meet the qualifications.
As you can see, there are some real tangible benefits to home ownership in addition to all of the psychological and emotional benefits that accrue. Be sure to speak to your CPA or a tax professional if you have any questions about the deductions and exclusions mentioned in this article to ascertain if they apply to your individual situation.
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.