Like everyone else, you probably want to know every way that you can save money on your taxes.
If you recently bought a home, you might be happy to know that there are some expenses that you can deduct from your taxes. Since closing costs can be quite expensive, this can significantly ease the financial pain of purchasing a home.
Here are some of the home buying expenses that you can deduct when it’s time to file your taxes.
Expenses You Can Deducts
You can deduct your property taxes. In some cases, you might have to reimburse the seller for some of the property taxes they paid before you bought the house. You can also deduct this expense.
One of the biggest factors that affects the total cost of your mortgage is the interest rate.
In some cases, interest rates can be outrageously high, particularly if you have poor credit. This can add thousands and thousands of dollars to the total cost of your mortgage.
Fortunately, the mortgage interest on your primary residence is deductible. You may also be able to deduct the mortgage interest on your secondary residence, up to a certain amount.
You may be charged one or two types of points when you buy a home.
Things You Can’t Deduct
It is also very helpful to know which expenses can’t be deducted from your taxes. You should be careful to avoid deducting certain expenses in order to avoid getting into any trouble with the IRS.
Depending on the location of your home’s community, you may be required to pay dues to a Homeowners Association
Unfortunately, these dues are not tax deductible.
You can not deduct your home insurance from your taxes.
While you used to be able to deduct mortgage insurance premiums for policies issued after 2006, the ability to make this deduction has been removed.
Getting an appraisal is a necessary expense when buying or selling a home. An appraisal will help identify any issues present in a property before committing to a buying the home.
While appraisal fees can be costly, they are not tax deductible.
How Much Will You Save?
You’re probably interested to know how much you could save. Unfortunately, it’s difficult to say how much you will save as it depends on a number of factors. Some of these factors include:
- Your filing status
- Your taxable income
- Other itemized deductions
- Your current standard deduction amount
These factors, among others, will affect how much you are able to save on your taxes. So, it’s important to evaluate your current circumstances before being able to estimate how much you can save.
When it comes to doing taxes, it’s important to consult with a tax professional to ensure that you are saving as much as possible without making any ineligible deductions.
Certain home expenses can be deducted, but it’s important to be sure which expenses are eligible before making any decisions.