Carole VanSickle for the Bryan Ellis Investing Letter writes: You probably know about the mortgage interest deduction (MID), but
most people don’t know about these three real-estate related tax
deductions that tend to come and go in IRS regulations. Recently,
Congress retroactively revived many tax deductions for home- and
property owners, and many states are also attempting to save homeowners a
little bit of money this year just in time for tax season. Check out
these three often-missed, real-estate related tax deductions and make
sure you are keeping every penny that is yours this tax season!
State sales taxes, including on major home improvements. If you think the deduction for state sales taxes expired in 2011, you're right. But a bill approved this past Jan. 1 restored it, and the restoration is retroactive.
Even if you use the standardized IRS Sales Tax Deduction Calculator to determine whether and how much state sales tax to deduct, you can also add specified big-ticket purchases, including major home improvements. Just be sure to check out the IRS restrictions on those specified items first.
Refinancing points -- including previous refi points when you re-refinance. This is a little complicated, but here goes. When you refinance a loan for the first time, the points are deductible, with a caveat: You can't deduct them all at once, as you can with an initial home purchase. Rather, your tax-deductible points must be spread out over the life of the loan.
But if you've re-refinanced -- and indeed, many people have refinanced multiple times to take advantage of fast-dropping rates -- you could get a tidy deduction as the result of that delayed gratification: You get to deduct the remaining undeducted points on the previous loan. (That's because you're essentially cutting short the life of the loan, paying it off all at once in order to re-refinance.) Woot!
One exception, though: If you re-refinance with the same lender, then you roll those remaining undeducted points into any new points and, again, spread out the total over the loan term.
Energy-saving home improvements. Tax credits for some energy-efficient home improvements officially expired at the end of 2011 -- but we hope you didn't toss your receipts, because Congress recently revived them, retroactive to 2012. And these are credits, not mere deductions, meaning more money in your pocket. You can save up to $500 on your taxes for energy-saving upgrades. Check out the federal Energy Star website for details on which home improvements are eligible.
Charitable donations. Don't forget household items you might have donated throughout the year, as long as they were in good condition. Goodwill has a helpful PDF that estimates the values of commonly donated items, including household items like lamps ($4 to $12), VCRs or DVD players ($8 to $15), computers (as much as $250), and desks and dressers ($20 to $60).
Moving expenses to take your first job. If your new job is at least 50 miles from your old home, you can deduct the cost of getting yourself and your household items there, Kiplinger says, including 23 cents a mile plus parking and tolls if you drove your own car. And you don't have to itemize to take the deduction.
- Refinancing Points
When you refinance a loan for the first time, you get to deduct your refinancing points on that loan. However, this is a longer process than you might think because these points must be spread out over the life of the loan rather than deducted all at once. For this reason, many homeowners and accountants miss this deduction all together. There are many rules governing how many points you can deduct and when you can deduct them, so bring this up with your tax professional to see if you might be eligible for this deduction. - Moving Expenses
If you had to move in order to take a new job, then your moving expenses could be tax deductible. Your new job must be at least 50 miles from your old home in order to qualify, but if it is you could deduct moving expenses for getting yourself and household items to your new location and, if you drive your own car to get there, you might get a deduction for mileage and tolls as well. - State Sales Taxes Paid on Home Improvements
Depending on what type of home improvements you made to your home this year, you might be able to deduct the amount of state sales taxes you paid on those improvements. The IRS has a very specific list of qualified improvements for this deduction, so check with your tax professional before you start whittling away at your tax totals using this method below.
Most overlooked home-related tax deductions
Jennifer Karmon for Yahoo writes: Most overlooked home-related tax deductions Our friends at Kiplinger recently published a list of almost two dozen of the most overlooked tax deductions, and we discovered that quite a few are home-related.
A couple of them even expired but were revived retroactively by Congress. (Hope you didn't throw away your receipts!) See if you've overlooked any opportunities to save on your taxes:
State sales taxes, including on major home improvements. If you think the deduction for state sales taxes expired in 2011, you're right. But a bill approved this past Jan. 1 restored it, and the restoration is retroactive.
Even if you use the standardized IRS Sales Tax Deduction Calculator to determine whether and how much state sales tax to deduct, you can also add specified big-ticket purchases, including major home improvements. Just be sure to check out the IRS restrictions on those specified items first.
Refinancing points -- including previous refi points when you re-refinance. This is a little complicated, but here goes. When you refinance a loan for the first time, the points are deductible, with a caveat: You can't deduct them all at once, as you can with an initial home purchase. Rather, your tax-deductible points must be spread out over the life of the loan.
But if you've re-refinanced -- and indeed, many people have refinanced multiple times to take advantage of fast-dropping rates -- you could get a tidy deduction as the result of that delayed gratification: You get to deduct the remaining undeducted points on the previous loan. (That's because you're essentially cutting short the life of the loan, paying it off all at once in order to re-refinance.) Woot!
One exception, though: If you re-refinance with the same lender, then you roll those remaining undeducted points into any new points and, again, spread out the total over the loan term.
Energy-saving home improvements. Tax credits for some energy-efficient home improvements officially expired at the end of 2011 -- but we hope you didn't toss your receipts, because Congress recently revived them, retroactive to 2012. And these are credits, not mere deductions, meaning more money in your pocket. You can save up to $500 on your taxes for energy-saving upgrades. Check out the federal Energy Star website for details on which home improvements are eligible.
Charitable donations. Don't forget household items you might have donated throughout the year, as long as they were in good condition. Goodwill has a helpful PDF that estimates the values of commonly donated items, including household items like lamps ($4 to $12), VCRs or DVD players ($8 to $15), computers (as much as $250), and desks and dressers ($20 to $60).
Moving expenses to take your first job. If your new job is at least 50 miles from your old home, you can deduct the cost of getting yourself and your household items there, Kiplinger says, including 23 cents a mile plus parking and tolls if you drove your own car. And you don't have to itemize to take the deduction.
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