Homeowner Tax Breaks and Deductions Lake Havasu
With the real estate economy across the country in such great shape, many homeowners are seeking even more benefits through homeowner tax breaks and deductions. Along with owning a home and the maintenance that comes with it, there are many other home-related expenses you can deduct from your taxes to help with your sing-family residence, yourcondominium, your townhome or other place of residence. If you think it’s worth it and are looking for homeowner tax breaks, you have come to the right place. We have some tips and tricks to help you get the most out of your deductions when it comes to your real estate needs.
Homeowner Tax Breaks and Deductions Tips
Mortgage Interest Break – This will be one of your biggest homeowner tax breaks. It is reflected in your house payment each month in most homeowner’s cases. During the early years of your mortgage, the majority of your loan payment will go to interest. Therefore, you can deduct these interest payments for the year. However, if your loan is over $1 million, you will not get a tax break on the interest. The IRS limits your deductible interest if you own a multimillion-dollar mortgage.
You can also deduct equity debts of $100,000 or less if you took out a home equity loan or line of credit during that year. And, if you are the owner of multiple homes, you can deduct the interest of your second mortgage too. You just need to spend at least 14 days a year at this second property for it to be tax deductible. If you don’t have a second home but have a boat or RV loan that has cooking, sleeping and bathroom facilities, you can deduct this as well.
Points Tax Break – If you paid points to get a better rate on your home loan you will qualify for a tax break. You will run into the issue of when you are allowed to claim them. The IRS will let you deducts the points only in the year you paid them, so don’t forget to grab these deductions while you can.
Check with you tax professional to make sure your loan meets all the qualification requirements so you can deduct all the points at once. Here’s how a breakdown of eligible tax break deductions would look: If you paid $2,000 in points to refinance your mortgage for 30 years, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan. This will also apply to lines of credit and home equity loans.
Property Tax Breaks – Another big homeowner tax breaks are the property taxes. It’s a huge deduction that can really benefit you. Part of your monthly mortgage payment will go to an escrow to pay for insurance and property taxes each year. You will get an annual statement from your loan company that has a complete breakdown of how much interest you paid, how much went to property taxes and how much went to homeowner’s insurance. This will be an annual deduction you can benefit from. However, in the first year, you may only get to deduct a portion of the property taxes since you did not own it the entire year.
Home Selling Breaks – You can also get a tax break when you sell your home. If you have lived in your home for 2 of five years that you have owned your home, it is a tax free sale up to $250,000 for single or $500,000 if filing jointly. As of 2008, if you sell your second home or property, you will owe taxes on a portion of it.
This homeowner tax breaks information is brought to you by: Willie and Brenda Gonzalez, your Lake Havasu AZ real estate professionals serving all your home buying and home selling needs in Lake Havasu City.