The following is some timely information important for recent homeowners to be aware of. Please contact Terry Lockridge & Dunn and World Trend Financial for more details on how you can take advantage of these money-saving opportunities.
- Mortgage interest paid to a private loan, for example a seller-financed loan or loan from a relative, is deductible as long as the loan is secured by the residence.
- There may be additional deductible mortgage interest not reported to you by your lender on Form 1098 in the year you purchase your home. Check your HUD-1 (one of the main closing documents) statement, or have your tax professional review the HUD statement.
- Bring that HUD-1 statement to your tax appointment. Points paid in the year you purchase your home are deductible as an itemized deduction. They will be listed as points, loan origination fees or loan discount fees. These are more than likely deductible even if paid by the seller. If you do not have enough itemized deductions for the year, consider amortizing the points over the life of the loan instead of losing them.
- Interest paid on home equity lines of credit up to $100,000 is deductible as long as secured by the home. Where and how you spend the money is not a factor for deductibility.
- Did you purchase your home after moving for a new job? Your moving or relocation expenses may be deductible on your tax return.
- Have you made any improvements to the home for medical reasons? They may be deductible.
- Yet another reason to keep the HUD-1 statement. Non-deductible closing expenses such as appraisal fees, title insurance, credit report fees, and stamp taxes all add to the basis of your home. This may come in handy when calculating a potential capital gain upon sale of the home. Also keep track of capital improvements to the home as they also add to the basis of your home.
- If your lender requires you to pay Private Mortgage Insurance, you may be able to deduct. Adjusted Gross Income limits apply.
- If your income is unusually high one year, you may consider prepaying some of your itemized deductions such as property taxes and mortgage payments. This will allow more itemized deductions to offset the additional income.
- In the process of moving, did you donate non-cash items to charity? Contributing clothing and household items may provide an additional itemized deduction as long as you have detailed receipts.
If you did not receive our original homeowner letter with even more money-saving tips, please request one through email by contacting jschulte@tld-inc.com.