It’s tax season, and if this is your first one as a homeowner, you’ll need to do things a bit differently when you file with Uncle Sam.
But here’s the good news. As a new homeowner, you now have the opportunity for tax deductions that you did not when you were renting.
The most obvious deduction is your mortgage interest. This includes what you have paid in interest each month on your mortgage and any interim interest you paid at closing. You can find the interim interest figure on your Closing Disclosure or your HUD-1 (if you closed prior to the new Closing Disclosure that went into effect October 3, 2015).
In addition, if you paid any points at closing to obtain a lower interest rate, these may also be claimed as a deduction in this first tax year after the purchase of your home.
Many first-time homebuyers also have Private Mortgage Insurance (this is required when you have less than 20 percent down). If your Adjusted Gross Income (AGI) is less than $100,000, your Mortgage Insurance may also be deductible. Mortgage Insurance is usually an addition to your monthly mortgage payment, but it is possible that you elected to pay it as a lump sum at closing. Check your Closing Disclosure or HUD-1 for this information.
Did you move for a new job, or transfer to a new location for your existing job? If so, there’s a good chance that you can deduct some eligible moving expenses. You’ll need to verify that you are eligible, but you may be entitled to claiming some deductions like mileage and hotel expenses.
There are other possible deductions that you may be eligible for, including credits for energy efficiency, deductions for home office, etc. Your accountant or tax professional can advise you on others that you may qualify for.
While filing your taxes may be a bit more complicated, the benefits of homeownership more than outweigh a little more paperwork when it’s tax time. Take a moment to celebrate the joy of owning your own home, and the tax advantages of homeownership.
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC