When you do your taxes, don’t forget those all-important home-related deductions. Mortgage interest is an obvious deduction, but be sure to capture any points you pay when you buy your home — you can deduct those in the year you buy the home, as long as it’s your main residence that you’re buying.
If it’s a second home, you have to divvy up those points and deduct them over the life of the loan (usually 30 years for most mortgages). TurboTax will walk you through this in the mortgage interest section under Deductions.
Own a condo or a home in a master-planned community? Homeowners’ association (HOA) fees aren’t deductible in nearly all cases. If you rent out part of your home, or if you use part of your home for business, do include a share of your HOA fees in your deductions for that rental or home office based on the amount of space you’re renting out… that part IS deductible.
Home improvements aren’t usually deductible, so don’t include these as deductions on your return. Some exceptions exist for medical purposes, but these are rare and are usually targeted improvements for disabilities. Again, though, if you’re renting out part of your home or if you’re using part of it for business, you can depreciate major home improvements for the portion attributed to the rental or to the home office! Don’t forget this… may not seem like much, but it can add up.
This covers most of the questions we get… What other home deductions do you want to know about? What about home sales: what can you deduct from the costs listed on your closing statement? We’ll cover these in a future blog entry…