#1 Deducting porperty taxes for the wrong year Often, your tax bill will not be dated from January to January the next year. To the IRS, this is irrelevant. Enter the amount of money you actually paid during the current year.
#2 Confusing the escrow amount with the tax amount If your mortgage has funds escrowed for taxes, insurance may be included also. Even if it is not, the escrow amount may be adjusted periodically to increase or decrease reserves to pay the taxes when actually due. The IRS only wants the amount PAID to taxes for the filing year.
#3 Deducting points on a refinance You can deduct points on the original purchase loan up front, but not on a refinance. Here they must be spread over the life of the loan.
#4 NOT deducting PMI (Private Mortgage Insurance) This one is not the same for everyone. If included in your mortgage, it usually begins to phase out as your adjusted gross income climbs above $100,000, disappearing as your AGI exceeds $109,000.
#5 Misjudging the Home Office Deduction This one requires some careful calculations. It may not be so great in the long run.
#6 Missing the First Time Home Buyer’s Credit If you qualify, use it. Refer back to our post on 07 January for more on this one.
#7 Failure to track home maintenance costs If you own a home, you ARE going to have maintenance involved. Know how to track what can save you here. Good records and filing are essential.
#8 Capital Gains are taxed differently than regular income. Know the difference and keep them separate
#9 Incorrectly Filing for Energy Credits Our last posting will cover this for you. Take a look.
#10 Claiming too much Mortgage Interest Deduction You usually are not allowed to deduct mortgage interest over $1,000,000. While home prices were at their peak this was a lot easier than it might sound.
Read more at the link above. As always, we can speak in general terns only. We do hope that these guidelines help get you going in the right direction. Every situation is different, and you should consult your tax advisor to answer your specific questions.
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