Believe it or not, it’s time for more tax talk. I’m sure for most of us, April 15th, 2011 is but a mere flicker of a memory. However, April 15, 2012 will be here before you know it.
As a new homeowner, you may have a few questions about the elusive tax terminology being batted about among talk show hosts and news pundits. Okay, okay, they’re probably talking about Jennifer Aniston’s new hairdo for her upcoming movie. Again.
Here at the Everett Area Real Estate blog, we’re going to get a jump start on The Tax Man; this will be especially helpful for you homeowner newbies. So, rather than waiting until next spring to sort through all the rules, regulations, and your recycle bin, have a plan: make a list, check it twice, and set up your system now. Trust me, when April 14th arrives, you’ll thank me.
Before we begin, let me remind you that in order to deduct home ownership expenses, you have to file Form 1040 and itemize your deductions on Schedule A rather than taking the standard deduction.
What You CAN Deduct:
- Real estate taxes paid to the taxing authority
- Mortgage insurance premiums
- Home mortgage interest
- Mortgage pre-payment penalties
What You CAN’T Deduct:
- Fire and/or homeowners insurance premiums
- The amount applied to reduce the principal of your mortgage
- Title insurance
- Cost of utilities (gas, electricity, water)
- Depreciation
- Most settlement costs
- Forfeited deposits, down payments, earnest money
- Delinquent taxes – if you agree to pay taxes owed by the seller from previous years, you cannot deduct them.
- Cost of credit report
- Appraisal fees
While moving in to your new digs, be sure to keep one of those moving boxes to store your purchase contract and settlement papers as well as evidence of home improvements (receipts, cancelled checks, etc.). Once the dust has cleared, your belongings are tucked away, and your filing system is set up, you can sit back, relax, and ponder life’s big questions like, “How do I feel about Jen’s new do?”
As your real estate agent in Snohomish County, I’m here to help all up-and-coming home owners. Give me a call sometime at 425-343-4545.
References:
IRS.GOV
Photo courtesy of stock.xchng
