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A Tax Fact from The Tax Institute at H&R Block
If you are new to home ownership or thinking about buying anytime soon, a little tax know-how will help you find more peace of mind from the biggest investment most of us ever make in life.
Welcome to Schedule A
Most everyone knows that qualified mortgage interest and real estate taxes are deductible. But what else comes with your first home? Most likely you now will be eligible to switch from the standard deduction to itemizing deductions on Schedule A.
Itemizing deductions means you will need to keep receipts and records of the types of expenses that can be itemized on Schedule A. Among deductions you can consider are:
Here are some basics about your mortgage interest:
This Tax Fact is brought to you by The Tax Institute at H&R Block.
To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com
As always...everyone's tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.
This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.
A Tax Fact from The Tax Institute at H&R Block
If you are new to home ownership or thinking about buying anytime soon, a little tax know-how will help you find more peace of mind from the biggest investment most of us ever make in life.
Welcome to Schedule A
Most everyone knows that qualified mortgage interest and real estate taxes are deductible. But what else comes with your first home? Most likely you now will be eligible to switch from the standard deduction to itemizing deductions on Schedule A.
Itemizing deductions means you will need to keep receipts and records of the types of expenses that can be itemized on Schedule A. Among deductions you can consider are:
- Employment-related expenses
- Tax preparation fees
- Medical and dental expenses
- State and local income taxes or sales taxes
- Personal property taxes (cars, boats, RVs)
- Investment expenses
- Gifts of cash and property to charities and religious groups
- Casualty and theft losses
- Gambling losses to the extent of your winnings
Here are some basics about your mortgage interest:
- "Points" means the loan origination fee. Each point is one percent of your loan total. Points you pay when you buy a house are usually deducted the year you pay them. But you also can amortize points over the term of your mortgage. Usually the immediate deduction is the best option, but not always.
- Mortgage interest you pay on loans up to a million dollars ($500,000 if you use the married filing separately status) is deductible, whether the loan went to buy, build or improve your home.
- "Home equity loan" interest, or interest on loans secured by your home and used for home improvements or for other purposes is deductible for loans up to $100,000 ($50,000 if you use the married filing separately status) or to the value of your home equity, whichever is less. Caution: If you use the loan proceeds on something other than your home (paying down credit card debt, for example), the interest is not deductible for the Alternative Minimum Tax (AMT).
- PMI, if you paid Private Mortgage Insurance (PMI) premiums on a new or refinanced mortgage issued no later than 2007, you can include these premiums with your mortgage interest deduction.
- Moving on up means you can exclude from taxable income gains on the sale of your main home up to $250,000 ($500,000 if you file jointly with your spouse). You generally may claim this exclusion only once in any two-year period. A loss on the sale of your home is, however, not deductible.
To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com
As always...everyone's tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.
This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.
