Tax Tips Tuesday: Buying a house can make taxpayers more at home with itemized deductions
A conservative estimate of how much it will cost to maintain a house is that a typical homeowner will spend 1 percent of the purchase price every year on maintenance. One way to help balance those costs is for homeowners to take advantage of all the tax breaks they qualify to claim.
Here are three tax tips for homeowners:
1. When paying a substantial amount of real estate taxes and mortgage interest – plus other eligible expenses – it may be worthwhile to claim itemized deductions instead of the standard deduction
2. “Basic” homeowner deductions
- Real estate taxes
- Mortgage interest – can deduct interest on up to two homes (one primary and one vacation home)
- Points – if the points were paid to borrow money to buy a home, they’re deductible in the year they are paid
3. In addition to keeping good records for tax purposes, homeowners should keep records that establish their basis so they can calculate their gain when they sell the home
- Keeping records that show the costs of substantial improvements is critical in being able to do this.