With tax day approaching very quickly, everybody is looking for ways to save some extra money with legal deductions and other tax tips. If you are a homeowner, you probably already know that you can deduct the interest from your mortgage loan on your taxes. If you are doing your taxes this year or simply want to know about some legal write-offs, here are a few of them you should be aware of.
• You can write off the mortgage interest paid throughout the year on your first and second home as long as the two mortgage loans together do not equal more than $1.1 million. This is for married couples filing jointly. For individuals, the amount is cut in half.
• If you took out your home loan before October 14, 1987, many of the new tax rules do not apply to you when it comes to deducting mortgage interest and so forth.
• You can deduct the interest you pay on your second mortgage if the loan was taken out on or after October 13, 1987. The limit for this is $100,000.
• Property taxes are another deduction you can make on your income. However, you can only deduct the money you have paid for property taxes and not any money held in escrow if it has not been applied to your property taxes yet.
• Homeowners who use part of their home as an office can deduct a portion of the costs to pay for and maintain your home. You can deduct a percentage or insurance, repair costs and even depreciation as well.
• If you sold your home in 2009, you can keep the profits up to $500,000 for married couples filing jointly if the home was used as their primary residence for at least two of the last five years. Singles or married couples filing separately can keep up to $250,000 each when selling a primary residence.
• You can deduct some moving costs if you moved in 2009 as a result of a new job. To qualify for moving deductions, you must move within one year of starting a new job, you new home must be within 50 miles of your new job and other regulations.
• If you are a first-time homebuyer with low income, you may qualify for the mortgage tax credit which is equal to as much as 20 percent of the interest payments you made on the new home.
Tax guidelines and rules can be very confusing. Even if you know some basic guidelines like the ones above, it is probably best to consult with a qualified CPA to ensure you are doing everything correctly. A few simple mistakes could land you in hot water with the IRS so you don’t want to take any chances.
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