There are numerous tax benefits to homeownership. As you may have guessed, the tax season brings up a wide array of questions about which types of deductions and taxes apply to homeowners. While your real estate professional may be familiar with certain applicable taxes it’s always best to seek out a financial professional for their insights and advice. Use this blog post as a conversation-starter when you meet with your tax preparer or financial advisor.

Where the Homeowner Tax Mistakes Could Happen

Note: Several of these are only applicable for someone who itemizes on their filing. 

1. Property taxes. Homeowners should take the tax deduction in the year the you actually paid the taxes. Some taxing authorities may work a year behind. Be sure to discuss this with your tax preparer and reference the correct year.
2. Mortgage interest. If you itemize your deductions, mortgage interest is an eligible deduction.
3. Escrow amount. Use the amount found on Form 1098 provided by your lender rather than the amount you have paid into your escrow account monthly.
4. Refinancing points. If you itemize, you may be eligible to deduct the points paid to refinance and secure your mortgage. The points can be deducted over the life of your new loan.
5. Home office tax deduction. Those working from home are eligible to a simplified deduction of $5 per square foot up to 300 feet of office space or up to $1,500 per year.
6. Know your home-related expenses. If you fail to keep good records of home-related expenses you may be omitting eligible deductions such as those related to a home office, home improvements, or energy-efficiency improvements.
7. Capital gains. If you sold your main home during the past fiscal year, the profits above the excluded amounts are taxable gains you must pay taxes on.
8. Home equity loan. If you used the loan amount for home improvements. Discuss these improvements with your tax preparer to determine which, if any, improvements and interest on the loan may qualify as eligible deductions.

No one wants to pay more taxes than are necessary. When you have good communication with your tax preparer you can be assured the preparer will help you avoid any of these common tax mistakes.

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers every year. Sara is an American Dream TV Power Player who shares Houston real estate news with television viewers. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region. Start the conversation by scheduling an appointment with Sara.