N.E.O. Home Loans - Tax Deductions for Home Owners

Tax Deductions For Home Owners

Home ownership has its tax advantages. Make sure that you're not missing out on your deductions. Home-related tax deductions, real estate tax benefits and home loan deductions, such as mortgage interest, are all perks that a home owner can take advantage of around tax time. As always, consult with a professional tax advisor to find out what tax deductions apply to you.

Deducting Real Estate Taxes *

That's right, your real estate taxes can be tax deductible*. Your interest statement should list the amount of real estate taxes you paid as long as your real estate taxes were placed in an escrow account when you closed your home. If your real estate taxes aren't included in your monthly mortgage payment then you can review your cancelled checks to find out exactly how much you paid.

Deducting Mortgage Interest *

The interest that you pay on your home mortgage may be tax deductible*. Every year, you should receive a "Form 1098" from your lender that details how much mortgage interest you paid. Consult with a professional tax advisor to find out how to claim your mortgage interest correctly on your tax returns.

Deducting Loan Points Paid on a Purchase *

The points that you pay on a loan for a home purchase are tax deductible* for the year you made the purchase. You can even deduct the points paid by the seller on your behalf if you meet the following criteria:

The amount of cash you put into the purchase of your home(down payment, closing costs, etc.) is at least equal to the amount you were charged for the points you paid on the loan

The loan was used to buy, improve or build the home

The loan is secured by your primary residence

The points are calculated as a percentage of the loan principal

The points are clearly outlined on the buyer's settlement statement

Deducting Seller Concessions

It's possible for the seller to contribute money to the buyer to help cover the buyer's loan closing costs. The average concession is 3% of the sales price. Seller concessions can go towards things like buying down the interest rate, closing costs, discount points, and pre-paid items such as per diem interest, escrows and tax pro-rations. Don't forget that seller paid points can be tax deductible.

* Always consult a professional tax advisor