Buyers /On February 13, 2014

Tax Time - What to Deduct if You Recently Purchased a Home

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Q: I bought a house last year. What can I deduct on my tax return?

A: Obviously, mortgage interest is a major deduction. Additionally, if there were “points” paid in connection with getting your loan (even if they were paid by the seller), then you may be able to claim a deduction in the year they were paid. This affects your cost basis, and you should discuss it with your CPA. tax benefits of homeownership

If you paid “PMI” (private mortgage insurance, which is required by lenders when a borrower makes a down payment less than 20%), you may be able to deduct the payments along with your mortgage interest. There are several restrictions to this – it must be in the acquisition year, and there are income caps when your adjusted gross income exceeds six figures. Check with your CPA for details.

Your settlement agent or REALTOR can get you a copy of your HUD settlement statement, which is handy for a detailed report of the transaction, and a copy should be made for your CPA when he or she prepares your taxes, to make sure no potential deduction is overlooked!

Are you looking to start the home buying process and take advantage of the tax benefit next year? Email us at concierge@lizmoore.com, we'd love to help! Or, click below to download our free Home Buyer's Handbook.

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Lynnette Tully

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Liz Moore & Associates is a boutique real estate agency renowned for having the region's top agents, with extensive market knowledge and local expertise that is only achieved through relentless training coupled with Liz's extremely high standards for professionalism. When you're buying or selling a home, experience matters.