As if I haven’t stressed this enough there are tons of benefits to owning a home, especially around the tax season. Of course these tax deductions vary by state and as a homeowner one of your new responsibilities is to stay updated on the changes that sometimes happen yearly. But since it is the tax season I thought it’d be appropriate to share four tax tips that homeowners can receive for 2014.
- Mortgage Tax Deduction – Mortgage tax deductions include: home equity loans (HELOAN), home equity lines of credit (HELOC), interest paid on refinances, second mortgages, and “mortgage interest paid to a lender” according to a recent article I was reading.
- Discount Points Tax Deduction – According to the same article, a discount fee is decided at the time of closing and is only tax deductible if the mortgage is decreased from the normal market value. An example that the article uses is if the monthly mortgage rate were 5% you would both agree 4.75%. These discount points are viewed as “prepaid mortgage interest” in the eyes of the IRS and is therefor tax deductible.
- Home Modification Tax Deduction – This could easily include some home modifications that were made to accommodate a family with a medical illness or a disabled person. Home offices are also included in this category. While these are both categories that can be tax deductions, there are certain limitations. For example the changes made for the ill or disabled family member must not increase the home’s value and cannot simply be for visual reasons. Also, the home office deductions usually include things like phone lines and heat and electric cost, however specificities are best discussed with you accountant.
- Real Estate Tax Returns – Taxes that are paid by homeowners usually include both local and state taxes. Your mortgage lender should have an annual statement they can send you and your accountant should be able to determine the tax deduction from there.
Tax deductions are a big reason that “buy” is the answer for the ever-popular question about “renting versus buying?”. Not only do you get a number of tax deductions, but also you get the freedom of no restrictions when it comes to anything from having guests and parties, to any number of pets, and more. I could go on for days about the benefits of owning a home, but I think it’s best if you contact me directly so we can go over that in person!
Invest in Pittsburgh Real Estate!
If you’re ready to invest in your own Pittsburgh home, make sure to contact me, Jim Dolanch at (724) 288-8800! I’m your dedicated Pittsburgh real estate expert and I would love to help you at every step of the home-buying process.
Until next time,