It’s been said there are two things you can’t avoid in life: death and taxes. And the deadline to file your 2010 income taxes is fast approaching. April 15th will be here before we know it, so it’s probably time to review a few items related to tax deductibility when it comes to owning your home.
Most people know that mortgage interest is a tax deductible item. The total amount paid will be reported to you on Form 1098. However, there are limits to the amount that can be deducted, especially if you have pulled equity out of your home through a refinance or second mortgage. Generally speaking, interest on home equity debt is deductible on the first $100k of debt. You’ll want to check with your CPA or tax preparer for advice specific to your situation.
Again this year, mortgage insurance payments will be a deductible item. Be aware that there are restrictions on who can deduct these payments. Income limitations are in place, and if the homeowner’s adjusted gross income exceeds $100k, the deduction gradually phases out. This deduction is typically voted on annually by Congress, and they have now approved it for four consecutive years. However, in a political climate that is calling for spending cuts, I wouldn’t be surprised to see this tax deduction eliminated in the future.
Also, be sure to deduct the property taxes that you pay on your home. You may not have noticed, but despite the decline in home values across the country, generally speaking there hasn’t been a corresponding drop in the assessed values by our taxing authorities. We’re still paying property taxes at a pretty high rate.
Everyone’s circumstances are unique, so again, please seek professional advice from a CPA or licensed tax preparer to ensure that you are maximizing the deductions that are available to you.
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Posted by: custom essay writing | 12/27/2011 at 12:22 PM