There are typically many possible tax deductions for owning a primary residence through use of tax deductions. Deductions lower your taxable income and therefore result in lower taxes. It is useful to understand the tax implication before buying or when evaluating renting vs. buying. This blog post offers details on Treasure Coast FL possible tax deductions for owning a primary residence.
Tax Deduction Requirements
Not every home owner can take advantage of tax deductions. When preparing your taxes, you can opt for the standard deduction or itemized deductions, whichever is higher. If you own an inexpensive home, the deductible costs may not add up to more than the standard deduction. Other personal variables may come into play as well. Only a tax advisor can offer a true evaluation of the tax advantages of owning a home taking into consideration your personal situation.
Usable Home Costs
Only the interest portion of your mortgage payments are tax deductible. In the early stages of having a home, you get charged more for interest than principal. As a result, the amount of deductible interest is higher when you first own a home than in subsequent years. Your mortgage company will send you a statement each year summarizing the mortgage interest paid on your home.
Real Estate Taxes
Real estate property taxes can also be tax deductible. Real estate taxes are a yearly figure but are traditionally billed in quarterly amounts. These taxes are sometimes included in your mortgage statements, but be sure to keep copies of the property tax bills sent directly to you. The total in mortgage statements are sometimes not accurate.
If you first purchased your real estate within a specific period of time and if you are within a specified income bracket, you can possibly deduct MI payments. MI is charged on a monthly basis for loans more than 80% of the market price and until the loan amount drops below the 80% level.
Points and Other Charges
Consider keeping a copy of your closing settlement statement. Some charges such as points, adjusted real estate taxes, and pre-paid interest could be deductible. Furnish the paperwork to your accountant.
The above is details on Treasure Coast FL possible tax deductions for owning a primary residence and refers to primary residences. If you have investment property, the possible deductions may not be the same. This is meant only as a general overview. Always speak with a tax professional for solid guidance specific to your personal profile or to your type of property.