The holidays have passed, Valentine’s candy is 75% off, and the stores are already bursting at the seams with all-things-green, so it must be true: Tax season is upon us.
Tax time got you working up a sweat? You’re not alone. Turns out 100% of Americans dread April 15th with a passion. Turn up the love and dial back the hate in the love-hate relationship you have with taxes with these 5 tips.
“The largest tax break available to homeowners is directly tied to the monthly payment you’ve made each month, as for most, a significant portion of your total amount due goes towards interest,” says Lisa Green, VP of Loan Origination for Allen Tate Mortgage. The good news here is that all of that interest is deductible. This includes what you have paid in interest each month on your mortgage and any interim interest you paid at closing. Green says you can find the interim interest figure on your Closing Disclosure. And if you happen to own a second home, the rule applies here, too.
Don’t forget about points, says Green. “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.”
Private mortgage insurance
Many first-time homebuyers also have Private Mortgage Insurance (this is required when you have less than 20 percent down). Check with your accountant as your Mortgage Insurance may also be deductible, depending on your income. “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,” says Green. Check your Closing Disclosure 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.
If you work from home you may be able to take the home office deduction. To qualify, you must have a dedicated space within your home that is used regularly and exclusively for business.
You can also receive a Residential Energy Efficiency Property Credit for solar, wind, and geothermal equipment in both your principal residence and a second home.
“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,” says Green. Take a moment to celebrate the joy of owning your own home, and the tax advantages of homeownership.