Most people want to keep as much of the money they earn as possible. Tax deductions are one way to accomplish this. Do you know which real estate expenses are eligible tax deductions?
First, let me warn you that I am not a tax accountant, nor do I play one on TV. By the way, my Broker-in-Charge just stuck his head in the door and said I have to tell you to check with a tax professional to make sure any of this stuff applies to your particular situation.
That being said, I can certainly let you know about some of the common real estate related tax deductions that you should be asking about if you have recently purchased a home, or if you own a home.
Mortgage Interest
This is the big one. You should be able to deduct the amount you pay in interest from your earned income. That means you don’t have to pay tax on that amount of money. If you just got a 30 year loan, this is a big number.
You should also be able to deduct any interim interest you payed at closing if you purchased your home last year. If you are one of my clients, you will be receiving a copy of your closing statement in the mail in the next few days. Be sure to have your tax preparer consider this as a deduction for you.
Real Estate Taxes
Hey, my accountant tells me that I can deduct the amount I paid in real estate taxes from my income taxes. Hmmm. Deducting your taxes from your taxes. Sounds like fun, doesn’t it? Maybe I should have been a tax accountant if I think this stuff is fun. Sorry, I digress. be sure to ask your tax preparer about deducting real estate taxes you paid from your earned income.
Discount Points
This one doesn’t come up too often because not many people use discount points to buy down their loan rate. With the historically low rates we continue to see, this option just doesn’t get used very much. But, just in case you closed on a home last year, and paid discount points, be sure to ask your tax person if you can use this as a deduction.
Other Stuff Like Origination fees
This is a little more tricky. Definitely get professional advice on origination fees, etc. Although usually these items are not deductible, there are certain instances where they might be.
Need a good tax accountant? I’m really happy with the person who keeps me straight. Just email me and I’ll be glad to pass his contact info along.
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