Uncle Sam's Day of Reckoning (April 15) is looming large on the horizon,
causing that familiar old hollow feeling in the pit of your stomach. Don't
feel guilty. You're not exactly a bad person--you're just like the rest of us
who can think of better things to do than wading through forms, old checkbook
registers and receipts. And if you're a new homeowner or first-time
homebuyer, you're probably dazed and daunted by the upcoming ordeal. How do
you get those deductions your real estate agent promised would take a big bite
out of your taxes?
New homeowners must take extra time preparing their returns and becoming
familiar with the tax benefits. If you're a do-it-yourselfer, you'll have to
obtain the necessary forms and instructions, as well as the records from your
home purchase, escrow statement and mortgage interest payments. If you haven't
itemized before, steel yourself for more work--this is not going to be like
the good old days of the 1040-EZ . But it's well worth the extra effort.
Depending on your income and eligibility, your tax burden may be considerably
less with mortgage interest, property taxes, loan points, and other possible
deductions (if allowed by the IRS in your situation).
Fortunately, the IRS has a number of booklets that explain how things work for
the homeowner. Many forms and publications can be downloaded from the
Internal Revenue Service web site at www.irs.ustreas.gov You also can obtain
these booklets by calling your local IRS office or toll-free to (800)TAXFORM
(829-3676). Start with No. 530 Tax Information for Homeowners. Also see No.
936 Home Mortgage Interest Deduction and No. 932 New Rules for Home Mortgages.
Check out No. 521 Moving Expenses, and you'll need to file IRS Form 3903 for
Home-based business owners should read No. 587 Business Use of Your Home.
Owner-investors may want to see No. 534 Depreciation and No. 551 Basis of
Assets. Apartment dwellers should read No. 588 Condominiums, Cooperative
Apartments and Homeowners Associations.
If you sold your home last year, you'll need IRS Form 1099-S Proceeds from
Real Estate Transactions to report the sale of your home and any capital