7 Best Tax Deductions and Credits for Home Owners ~ Hampton Roads Real Estate Ramblings

7 Best Tax Deductions and Credits for Home Owners

Monday, January 9, 2017

Hello Hampton Roads,

With tax season upon us (the IRS starts accepting returns as of Jan. 23, 2017), there are certain benefits to being a home owner which can save you money!

Here is a list of the 7 best tax deductions and credits you should know:

#1:  Mortgage Interest Deduction (MID)
You can write off interest for your primary and vacation residences. If you're a new home owner, you've probably noticed that most of your monthly mortgage payment goes to interest not principal
and now you can turn that into a benefit when you take the deduction.

#2:  Property Tax Deduction
Real estate tax rates in Hampton Roads range on the low end from $0.99 per $100 in Virginia Beach to the high end of $1.30 per $100 in Portsmouth (side bar) and most home owners pay a little over
$2000/year in taxes. A couple of tips to know are that real estate taxes can be deducted only in the year they are paid and if you've recently bought a home, look on your settlement statement and see if
you paid any real estate taxes at closing and you can deduct this as well.

#3:  Points Paid for Mortgages and Refinancing
If you paid points on your mortgage or for refinancing, this is treated by the IRS as prepaid interest and depending on your situation you can either deduct the full amount up front or spread it out
over the life of the mortgage.

#4:  Interest Paid on home improvement loans
To qualify for the deduction, the loan must be used for capital improvements and not repairs on your main home.

#5:  Interest on home equity loans
This deduction can be used either on your primary home or on a 2nd home.

#6:  Private Mortgage Insurance (PMI)
If you bought a home and put less than 20% down, chances are your pay PMI. PMI may be deductible based on the income you make. You can deduct PMI if you make less than $54K as an individual & less than $109K  as a couple filing jointly.

#7:  MCC (Mortgage Credit Certificate)
If you recently bought a home and were lucky enough to get a MCC, this acts as a dollar for dollar credit against the taxes you have to pay.  For more details, read my blog post "A Mortgage Credit Certificate Just Made Home Buying a Little Easier!"

Hope this information helps save you money on your taxes!

Thanks for Reading,

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