The good news: New deductions are a major plus when you finally buy a home. The bad news: Your taxes are going to get a little more complicated this April. Here's the deal:
Items You Can Deduct
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Homeowners in Calvert County, Maryland enjoy real beauty right in their backyard. Located on a peninsula that borders the Chesapeake Bay and the Patuxent River, this area boasts tons of seafood restaurants, many right on the water. And yeah, we have new homes in Calvert County.
There are lots of things you can deduct from your federal income taxes. For further details, head to the Nolo website (we love them). But here's a quick summary:
- Home mortgage interest (a juicy part of your mortgage)
- Equity loan interest
- Home improvements
- Property taxes
- Home office deductions
- Selling costs
- Moving costs
What You Can't Deduct
Needless to say, there's lots you can't deduct. For starters:
- Fire insurance, homeowner's insurance, and title insurance
- Wages that you pay for domestic help (that would be a cleaning service or house sitter, for example)
- Depreciation of your home
- Utility costs, such as gas, electricity or water
- Most settlement costs
- Forfeited deposits or down payments (sorry, Charlie)
For more info on real estate tax laws, check out the IRS website which outlines all of this in greater detail.
New Breaks This Year
Thanks to the fiscal cliff deal signed by President Obama on January 1, we now have the American Taxpayer Relief Act of 2012 which can save most taxpayers even more money. These include:
- A mortgage insurance premium deduction. (However, this deduction is for taxpayers earning less than $110,000 a year.)
- Tax credits for energy efficiency. You can deduct up to $500 off your income tax for energy-efficient improvements (a new water heater, furnace, or added home insulation, for example)
The Washington Post offers a nice summary of the pros and cons of this new legislation.
Ryan Homes Tip: If doing your own taxes seems overwhelming, consider visiting a pro. Here are some tips to help you figure out what kind of assistance you really need.