Tax Deductions for Homeowners

Jan 30th, 2011 | By | Category: Life Lessons

Taz Credits for homeowners | The Sahuarita Connection

If you are a homeowner, you should start planning for your 2010 tax return filing to make sure you don’t miss any tax credits or deductions you may be eligible for. This article only serves as a guide, so consult with your CPA or the IRS for accurate information. So, what can you deduct as a homeowner?

Energy tax credits

If you bought any home repair items that improved energy efficiency, you may be able to claim an energy tax credit. This includes new windows, heating and cooling upgrades or replacements, ventilation systems, insulation, skylights, roofing, water heaters and doors.  For a list of items that qualify, go to www.energystar.gov. If your purchase qualifies, you can receive up to 30% of the total purchase, not to exceed $1500. Solar systems installed on your primary residence between Jan. 1, 2009, and Dec. 31, 2016 are eligible for a tax credit of up to 30% of the cost. To qualify, the system must supply electricity to a residence and meet local building codes. Solar tax credit eligibility rules are more complicated, so plan to consult a tax advisor.

Mortgage Interest

The interest that you pay as part of your mortgage is tax deductible. You can deduct interest on multiple properties that you own, up to a value of $1 million. Your lender typically sends an IRS Form 1098 that shows the amount of mortgage interest you paid for the entire year.

Real Estate Taxes
You can deduct any real estate taxes you paid on the property.

Military Tax Breaks
The IRS extended the first-time homebuyer tax credit for an extra year to military members who served at least 90 days abroad or performed qualified duty between Jan 1, 2009 and April 30, 2010. Qualifying military personnel have until April 30, 2011 to sign a contract on a home and must close before July 1, 2011. First time military homebuyers can earn a tax credit worth up to $8,000, and “move up” homeowners can earn a credit of up to $6,500.

Vacation Homes

If you really use your vacation home as a vacation home for your personal enjoyment, you can usually deduct mortgage interest and real estate taxes, just as you would on your main home. You can rent out the home for up to 14 days during the year without getting taxed on the rental income. If you rent your vacation home for more than 14 days, but also use it for yourself for less than 15 days, you can treat the home as a rental-only income property. Classifying the property as rental-only income property allows you to deduct utilities, cleaning costs, repairs and condo fees. It may be a hassle to figure out which tax deductions you can take advantage of, but it is always worth the trouble to save money!

For more information go to: http://www.irs.gov/pub/irs-pdf/p530.pdf