On Your Side
Featured Issue: Big Tax Breaks Benefit Homeowners
What Can Be Deducted . . . With What Limits?
Local taxes? Yes!
The general rule is that real estate taxes are deductible as long as they benefit the general public and assuming that all area homeowners are billed at a uniform rate. Here's how:
- Get a copy of your real estate tax statement from the local tax authority, if you don't already have one in your files.
- School district taxes are 100% deductible.
- Remember to subtract any local tax refund you may have gotten during the tax year before tallying your deductible. Double-deducting is frowned on by the IRS.
Note: One important word to the wise. Much as you might wish otherwise, fees for trash pick-up are not deductible. Sorry.
What Else? Deduction Tips . . .
Mortgage interest, of course, is wholly deductible, which is a HUGE tax benefit enjoyed by homeowners. With the following provisos:
- Joint-filing married couples can deduct interest on the first $1 million of the mortgage. Separate filers are capped at $500,000.
- If your mortgage exceeds those limits, see Publication 936.
- If, however, you have taken out a home equity mortgage and used the loan proceeds on anything other than to buy, build or improve your home, the IRS strongly recommends reviewing Publication 936 when filing your itemized tax return.
- If you have refinanced or bought a second home? Again, the IRS considers Publication 936 an important resource for you or your tax preparer.
- What if you pre-paid some of last year's interest? Be sure not to include any pre-paid interest for this year. Get a statement from your lender if you don't have one on hand already.