Homeowner Tax Guide: Get All Your Deductions!

Photo Credit: http://theiowarepublican.com

In a time where buyers are cautious and are really weighing out all the benefits of home ownership here are some considerations for tax season. Several tax deductions and credits are providing relief to homeowners and making them very proud of their investment decision. Deducting mortgage interest, home equity debt, capital gains on home sales and taking advantage of energy conservation credits are just a few of the tax season benefits that homeowners can cash in on. Do you have a home office? There’s another one. Most of our monthly home loan payment is interest and you can deduct every bit of it. Only those folks with a loan of $1,000,000+ receive a cap on this deduction.

Stephanie Singer, a Realtors.org contributor wrote about this topic in Tax Time Less Taxing for Home Owners. She said that, “ninety-one percent of homeowners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year.”

We found a great resource from Kiplinger.com. They have listed all the deductions for homeowners at “What’s Deductible? – A to Z.” Check it out to make sure that you’re getting the most deductions as a homeowner. We use a skilled accountant in Wenatchee to guide us through our own tax deductions. We suggest that you hire a recommended accounting professional to point out these important opportunities for you.

Seller Costs: What the bottom line looks like.

There’s that old saying, “you have to spend money to make money.”  When selling a house it’s important to remember the associated costs.  Your realtor is very well educated on the subject and can elaborate more, but here is a short list of considerations for sellers.  (1) Get Ready To List.  Fix all those little repairs before the home is listed because the buyer will order a home inspection.  No matter how small the issue is the buyer will use this as ammunition later.  (2)  Commission.  While real estate commissions are negotiable the typical rate is 5 to 7% .  (3)  State Excise Tax.   The seller pays this tax consisting of local and state.  Most of Chelan County is 0.50% making a combined total of 1.78%.  (4)   Closing.  When you sign on the dotted line there will be some closing costs summed up from: escrow fees, title fee, document fee and buyer’s closing fees.  These can total up to 1 to 4%.  (5)  Loan Balance.  All loans on the home must be paid off before transferring the title.  (6)  Federal Income Taxes.  It is important to check with your accountant and prepare for the possibility of federal income taxes especially if the home is an investment property or used for business.