April 15th: Uncle Sam Wants Your Dough | Homeowners Fight Back!

Tomorrow is Uncle Sam's favorite day of the year! For some it's a time to rejoice over a much needed refund; but for others, it's a time to check between the couch to scrounge up some change to pay a detestable tax bill.. that, or change your identity completely and play a game of catch me if you can.  Let's be honest, we all can use a few extra bucks to do home improvements, fix that nagging check engine light problem, or pay off our bets for our busted March Madness brackets (UCONN?!? Really??) I've spoken with many people who are, currently, renting in order to enlighten them about the benefits of homeownership if, for nothing else, the tax benefits they can take advantage of around this time of year.  You'd be surprised how many of them have NO CLUE about this arena.  But similarly, there's a number of current homeowners that have no clue about these as well. If this is you, and you have a CPA who hasn't introduced you to these, fire them immediately after reading this post.  And if you're part of the educated bunch, which I'm sure you are, feel free to pass this information along.

The following can be eligible for a deduction as it pertains to your home:

• Your property taxes. Just when you thought that you were the personal financier of the University of Florida and other municipalities in Gainesville, DON'T FRET!! Uncle Sam allows you to deduct these. Don’t forget to include any taxes you may have reimbursed the seller for.  These are taxes the seller had already paid before you took ownership. You won't get a 1098 report listing these taxes. Instead, that amount will be shown on the settlement sheet.

• The mortgage interest on your primary residence, as well as on a second residence. Now don't go get super, crazy excited and "making it rain" because there are limits; but, nevertheless, this is deductible.

• The interest on up to $100,000 borrowed on a home equity loan or home equity line of credit, regardless of the reason for the loan.

• Points that you paid when you purchased the house (or those that you convinced the seller to pay for you).

• The premiums paid for Private Mortgage Insurance (PMI), but only for policies issued after 2006. Newsflash: this deduction is scheduled to disappear after this tax season! (The right to this deduction disappears as your Adjusted Gross Income rises from $100,000 to $109,000 (or $50,000 to $54,500 for those who use married filing separately status.)

• Home improvements required for medical care.

Now, you may ask, how much can I save on my taxes?? Well, I'm glad you asked. It depends! I know, your favorite answer right? Here are the factors it depends on:

• Your filing status (whether you filed single, head of household, married filing jointly, married filing separately)

• Your standard deduction amount

• Your other itemized deductions

• Your taxable income

Your home-related itemized deductions, plus your other itemized deductions must add up to more than the standard deduction or they won't save you any money. 

Conversely, these items are not deductable... Sorry to burst your bubble:

• Dues to a homeowners association

• Insurance on your home

• Appraisal fees for your home

• The cost of improvements to your home: except in the relatively rare case where they qualify as a medical expense. But it's very important that you keep those receipts. They may help reduce your taxes when you sell your home.)

So, I hope this helped. Don't wait until the last minute. Use a qualified CPA that you have interviewed and trust. There are tons of great ones in Gainesville, but they're probably tied up at this time of year so call NOW! Or there are some great do-it-yourself softwares like TurboTax and H&R Block that will thoroughly guide you through the process of filing for your home and/or business and maximize your deductions. I've been a TurboTaxer for years and have been immensely satisfied (shameless plug.)

If you have any questions or want any more information, please feel free to contact me at anytime!! Peace and Increase!