It's well worth taking advantage of the several tax benefits and deductions that are available if you have just bought a new home. These deductions can help to offset the high costs of owning a home and make the responsibilities of homeownership perhaps seem more worthwhile.
If you file your taxes jointly, you are eligible to write off the interest on your mortgage loan of up to a million dollars, and up to $500,000 if you file as a single taxpayer. Not surprisingly, this is one of the most valuable tax benefits for most homeowners, especially soon after you have bought your home, as most of your mortgage payment is simply going towards the interest.
You are able to claim a larger deduction on your taxes if the amount of your property tax is higher, as in such states as Vermont and New Jersey. Keep in mind that most homeowners usually make their property tax payments every quarter. This means that if you pay your first quarter taxes for 2018 in December of 2017, the deduction would count against your 2017 taxes, not your 2018 taxes, as the deduction is claimed in the actual calendar year that the payment is made.
Over time, if you pay points on your mortgage, it can be one of the most useful tax benefits that are available to anyone owning a home. The deduction must be spread out over the term of your loan unless your mortgage is being used to purchase your primary home and the points you pay are comparable to the industry standard, in which case you can benefit from the full points deduction immediately.
You probably had to pay between 0.5 and 1 percent of the value of your home in private mortgage insurance, if you didn't come up with a down payment of 20 percent of your home's value - and most of us don't have that much money to put down. However, if your income is below a certain specified level, that PMI could be another useful tax benefit when it comes to filing taxes. If you are a couple filing jointly, you are currently allowed to claim a PMI deduction if your combined income is under $109,000 and if you file individually, $54,000 is the threshold.
You can legitimately claim a home office deduction if you have a dedicated room in your home that is used solely as a home office, or for carrying out your business. The key to knowing what it can save you in taxes is determining how much of your living space is taken up by your office, and how much in a year you spend. As an example of how this tax benefit can work for you, you are able to deduct $150 if you live in a 2,000 square feet home, your office comprises 100 feet of that, and you spend $3,000 on eligible expenses.
Don't be one of the estimated 20 percent of Americans that miss out on tax benefits worth a little over $6,000 each year.
David Yeomans Accounting Service, Inc.