Tax season: a great time of year to be a homeowner

 

Disclaimer: This blog is not intended as tax advice. Please consult a professional or certified tax software program for details before deducting from your taxes. 

 

When you think about the biggest perks of owning a home – beyond your favorite shady oak tree or the spa bath with steamy rain shower – do tax write-offs top your list?

 

Maybe they should! 

 

After all, one of the biggest differences between owning and renting a home is the deductions you’re allowed when buying a home. And even annually in the years after. Tax deductions can be the difference-maker in overall cost when you compare renting vs. buying.

 

Did you buy a house in the New Orleans area last year? Here are 5 tax deductions you won’t want to forget on your taxes this April! (Next month we’ll cover tax deductions homeowners can consider every year.)

  • Mortgage Interest

If you have a mortgage on your primary residence, you can take advantage of the mortgage interest deduction the year you buy and every year thereafter. There are newer write-off limits but they still add up. Bear in mind that the further into the year you purchase, the lower your interest on your mortgage and the lower your write-off.

  • Prorated Mortgage Interest

Depending on what month you closed on your house, you probably paid pro-rated mortgage interest for that month. This amount can also be written off. The final real estate settlement statement will show just how much you’re due.

  • Prorated Real Estate Taxes

Everyone pays the local tax assessor for real estate taxes before closing. In some cases, the buyer will pay a pro-rated portion of the annual taxes at the closing to cover the amount due to the state of Louisiana and their municipality. Check your total amount paid as well – it’s deductible! If you end up paying your taxes monthly instead, you’ll want to add these up at year’s end as well. In years to come, you can count on writing off these expenses at tax time. 

  • Construction Loan Interest For New Homes

As long as the construction period didn’t last more than 24 months before you claimed your new home as your principal residence, you can write off the interest for a new construction loan. Don’t let this home-buying tax break slip through the cracks.

  • Mortgage Points

When you take out a mortgage, you may have the option to purchase discount points to lower your interest rate on the loan. If you purchased points, you can deduct the cost. Beware: ‘loan origination points’ are not tax deductible as they don’t impact the interest rate of your loan. (And while we’re at it, your down payment, insurance, and utilities are also not deductible. But wouldn’t that be great?)

 

Every year going forward, as a homeowner, you still get annual tax deductions!

This includes writing off your mortgage interest, property taxes, home office deductions, certain home improvements, and more. Stay tuned for more on these items in next month’s blog. 

 

With potentially thousands of dollars in deductions on the table, these are all tax breaks worth further research. Check out details of how property taxes and insurance can impact mortgage payments and talk to your real estate agent and local tax professional for more information.

 

And speaking of professionalism, when it comes to buying and selling a home, keep Clean Title, LLC, in mind. We’re researching the past to protect your future!

​Don’t miss our popular Title FAQs for tips that will give you the peace of mind only a clean title can. See us on our Facebook page and check out the details of our services on our website. Or call 985-277-5095 to speak to one of our title professionals today!

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