Tag Archives: taxes

Annual Credit Report

Don Reynolds, a Senior Loan Officer (CMPS) at Envoy Mortgage, sent out this great email this month: 

I hope this email finds you well.

I wanted to send you a friendly reminder to obtain a free copy of your credit report by going to AnnualCreditReport.com. This site is an initiative mandating that the 3 major credit reporting agencies allow consumers free access to their credit report once every 12 months. I accentuate the word “free” here because there are several other websites with similar names which are not free at all.

I highly recommend that you take advantage of AnnualCreditReport.com every year as one additional step in protecting yourself from identity theft and to make sure your credit is in good order for the next time you need a mortgage. As always, if you have any questions about this email, or just want to say “Hi”, I’m always here to serve you. Thanks again for your loyal business and referrals.

Sincerely,
Don Reynolds | Senior Loan Officer, CMPS
NMLS: NMLS # 1217170 | LO State Lic:
10 year resident of Breckenridge, Colorado
“Serving Colorado and it’s Mountain Communities”
Envoy Mortgage, Mountain Regional Center
9035 Wadsworth Parkway Suite 2730
Westminister, CO 80021
(970) 455-1008 Office Phone
(970) 333-3409 Cell Phone
(970) 480-1001 Fax Phone
Don.Reynolds@IncredibleLender.com
www.IncredibleLender.com

This is great advice not only as we head into tax season, but also in general if you are interested in buying a home or investing in a second property. 

Hey, Homeowners! These Little-Known Tax Deductions Can Save You Thousands

Be sure to get the most back on your taxes this year. Renee Morad from Realtor.com outlines some important tax information for homeowners. 


 

Hey, Homeowners! These Little-Known Tax Deductions Can Save You Thousands

By
Renee Morad

Sawayasu Tsuji/Getty Images

You probably already know that owning a home comes with some sweet tax benefits, like the mortgage-interest and property-tax deductions. But did you know there’s a whole list of other homeowner-related tax breaks that you might be leaving on the table?

We’re not talking chump change, either. Homeowners already save an average of $3,000 a year in taxes from mortgage-interest and property-tax deductions, according to the National Association of Realtors. When you add in some of the lesser-known homeowner tax breaks, you could really be amping up the savings—and beating the IRS at its own game.

Back in December, Congress passed the Protecting Americans From Tax Hikes Act of 2015, which extended many exemptions that were about to expire and made others permanent. But to reap the benefits, you first have to know about them.

So, here we go! Check out these common—and not-so-common—homeowner deductions that you should take advantage of this year:

1. Mortgage interest deduction

If you’ve taken out a loan to buy a house, you can deduct the interest you pay on a mortgage, with a balance of up to $1 million. To access this deduction, you will have to itemize rather than take the standard deduction. The savings here can add up in a big way. For example, if you’re in the 25% tax bracket and deduct $10,000 of mortgage interest, you can save $2,500.

Of course, there are some limitations. For example, if you’re helping a family member pay his or her mortgage, you can’t deduct that interest on your tax return.

2. Private mortgage insurance

Qualified homeowners can deduct payments for private mortgage insurance, or PMI, for a primary home. Sometimes you can take the deduction for a second property as well, as long as it isn’t a rental unit. Here’s the catch: This only applies if you got your loan in 2007 or later.

Another restriction: This deduction only applies if your adjusted gross income is no more than $109,000 if married filing jointly or $54,500 if married filing separately.

3. Property taxes

You can include state and local property taxes as itemized deductions. An interesting note: The amount of the deduction depends on when you pay the tax, not when the tax is due. As a result, paying property taxes earlier could have a positive impact on your return.

4. Capital gains on a home sale

The dreaded capital gains tax can be avoided when the gain from selling your personal residence is less than $250,000 if you are a single taxpayer or $500,000 if you are a joint filer. To qualify, you must have owned and used the home as a primary residence for at least two years out of the five years leading up to the sale.

5. Medical improvements

If you’ve made improvements to your home to help meet medical needs, such as installing a ramp or a lift, you could deduct the expenses—but only the amount by which the cost of the improvements exceed the increase in your home’s value. (In other words, you can’t deduct the entire cost of the equipment or improvements.)

“A lot of this comes down to fact and circumstance,” says Gil Charney, director of The Tax Institute at H&R Block. “For example, if you’ve recently installed a heated therapy spa or hot tub in your home, you may be able to deduct the expense if there’s also evidence that, say, a physical therapist visits your home three times a week and you’re over a certain age.”

6. Home office

If you have a dedicated space in your home for work and it’s not used for anything else, you could deduct it as a home office expense.

“It doesn’t have to be an entire room,” Charney says. “It can just be a dedicated space.”

7. Renting out your home on occasion

If you rented out your home for, say, a major sports event like the Super Bowl or the World Series, or a cultural event such as Mardi Gras, the income on the rental could be totally tax free—as long as it was for only 14 days or fewer throughout the course of a year.

8. Discount points

Discount points, which are paid to lower the interest rate on a loan, can be deducted in full for the year in which they were paid. In addition, if you’re buying a home and the seller pays the points as an incentive to get you to buy the house, you can deduct those points, Charney explains.

9. Energy-efficiency tax credit

You can take advantage of an energy-efficiency tax credit of 10% of the amount paid (up to $500) for any green improvements, such as storm doors, energy-efficient windows, and air-conditioning and heating systems.

10. Loan forgiveness deduction

If you’re the owner of a foreclosed or short-sale home, you can take advantage of mortgage-debt forgiveness. For example, if you make a short sale of your primary home at $250,000 but owe $300,000 on your mortgage, the lender will forgive the extra $50,000 owed—and you don’t have to pay taxes on that amount.

For more tax tips, check out IRS Publication 530 for a list of what homeowners can (and cannot) deduct.