Eight Great Tax Breaks You Don't Want to Miss! If you bought or sold a home in 2012......
1. Selling Price
Real estate broker’s commissions, title insurance,
legal fees, advertising costs, administrative costs and
inspection fees are selling costs and can reduce
taxable capital gain by the amount of the selling
costs. That could result in a big savings depending
on the final sale price.
2. Mortgage Interest
Within limits, mortgage interest is also taxdeductible.
A married couple filing jointly can
deduct interest payments on a maximum of $1
million in mortgage debt secured by a first or second
home. Buyers may also be able to deduct some of the
interest they paid on a home equity loan or similar
line of credit.
3. Origination Fees
Something many buyers often overlook is points.
Points or origination fees on a home loan paid during
purchase are generally tax-deductible in full for the
year in which they were paid. Refinanced mortgage
points are also deductible, but only over the life of
the loan, not all at once. Homeowners who refinance
can immediately write off the balance of the old
points and begin to amortize the new.
4. Private Mortgage Insurance
If your lender required private mortgage insurance,
the PMI premiums are tax-deductible for mortgages
taken out from 2007 through 2011.
5. Home Improvements
Improvements made to a property prior to the sale or
once one moves in might qualify for an interest
deduction on your home-improvement loan.
Qualifying capital improvements are those that
increase your home’s value, prolong its life, or adapt
it to new uses, such as adding a porch or installing
6. Real Estate Taxes
Many times during a sale, the seller will send the
local tax collector’s office a check for real estate
taxes prior to the closing. In many circumstances,
however, the buyer will pay a pro-rated portion of
the taxes for the year at closing. This tax deduction
also gets overlooked.
7. Home Office Expenses
For new buyers who work at home: If a room is used
exclusively for business purposes, they may be able
to deduct home costs related to that portion, such as a
percentage of your insurance and repair costs, and
8. Relocation Costs
In some instances, if you have moved because of a
new job, moving costs may be deducted. These can
include travel or transportation costs, expenses for
lodging, and fees for storing your household goods.
Every year the tax laws change and certain tax deductions become available while others
phase out. If you have recently bought or sold a home, it’s a good idea to seek out a
professional tax consultant to do your taxes. Missing deductions that you can legally claim
can add up.