Let’s face it, no one looks forward to tax season, except for maybe accountants I guess. But one way to make this time of the year a little more bearable is to keep some more money along the way.
It is easy to get caught up in standard family deductions, taxes on financial statements, and other basic accounting payments that real estate savings can get overlooked when it comes time to file. This year, consider these four tips from our Mortgage Maestro Group team to save money on your taxes.
WORK FROM HOME
More and more people are self-employed these days, and use their home as a primary office. If you are one of these folks there is good news, you can deduct home office expenses from your taxes.
In order to qualify you must be self-employed and use your home as the primary hub for your business, but that covers plenty of people who work remotely as independent contractors or shifted careers during the COVID-19 pandemic.
If you think this deduction may help, go to www.irs.gov for more details to see if your home office meets the requirements for a deduction.
PROPERTY TAX DEDUCTION
Most of us know that state and local income taxes or sales taxes can be part of your deductions in April, but some leave out property taxes.
Your property tax payment (which is paid either annually or biannually and is just the value of your home multiplied by the tax rate) can be included in the overall deduction that includes income/sales tax.
You are actually able to deduct up to $10,000 out of your property tax, local income tax, or sales tax. Mix and match as you please. Going this route may make more work for you or your accountant, but the juice may be worth the squeeze.
Depending on your income and sales tax deductions, and the assessed value of your home, it may be beneficial to include property tax in this deduction.
If you bought mortgage insurance after 2006 and your gross income is less than $109,000 ($54,500 for a married couple filing individually), you are eligible for a significant deduction from your mortgage insurance payments.
This deduction includes insurance purchased for Federal Housing Administration Loans and conventional mortgages, so jumbo loans will not count. Also, if your gross income exceeds $109,000, you may still be eligible for a deduction, just a smaller amount.
If you purchased a property after 2017, you are eligible to deduct up to $750,000 from the interest on your mortgage payments made over the course of the year. Just like your property tax deduction, this will require itemization of your taxes when it comes time to file, and there is an upper ceiling to how much interest can be deducted.
The Internal Revenue Service also sets certain requirements on which properties qualify for mortgage interest deductions, including the type of property (second home/condo/rental), the type of facilities it has (kitchen/bathroom), ownership details, etc. Feel free to give us a call or ask your accountant to see if this deduction might help you 303-779-0591.