Monday, December 28, 2015

By John Voket Before too long, homeowners will start thinking about preparing to file annual income tax returns. So we went looking for some of the latest advice on the types of deductions qualified homeowners can take on their 2015 taxes.

The Congressional Research Service (CRS), reports that in 2012 Americans took $68.5 billion in mortgage interest deductions (MID) - saving around $1,900 on average for American homeowners.

Americantaxservice.org says most homeowners can write off all mortgage interest up to $1.1 million for primary and secondary residences, as well as property taxes.

The site also reminds renters that credits for property taxes and other tax breaks are offered to in 21 states and the District of Columbia.

Another site, mortgagemaster.com, reminds filers that mortgage interest and property taxes are not the only tax savings homeowners can enjoy. That site also recommends homeowners look to see if they qualify for other deductions including:

• Discount points: You can deduct points in the year that you pay them; you can only use this tax break on your primary residence; and paying points must be an established business practice in your area.
• Profits: In 1997 Congress passed a law that made the first $250,000 in profits ($500,000 for married couples) tax free as long as you lived in the home for two of the last five years before the sale.
• Cancellation of debts: Under the Mortgage Debt Relief Act of 2007, homeowners who had their debt reduced through foreclosures, short sale or loan modifications weren’t required to pay taxes on the money saved up to $2 million. However, the law is set to expire at the end of 2015 if Congress doesn’t renew it.
• Finally, it's important to remember that calculating federal (and local) income taxes can be highly complicated. Any information provided here, and through sites like mortgagemaster.com should always be validated by a licensed tax professional before taking any tax deduction.

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