Homeowner tax deductions - Alliance Financial Resources, LLC

Deductible Homeowners Expenses

One of the advantages of owning your own home is that the home mortgage interest and real estate taxes paid can be deducted from your federal income tax. To do so, youll need to comply with current tax laws and complete the appropriate federal tax forms and itemized deduction schedules.

Home Mortgage Interest

For your home mortgage interest to be deductible, it must be for a first or second mortgage, a home improvement loan or a home equity loan. Additionally

The mortgage loan must be secured by your main home or a second home
Only interest paid for that tax year can be deducted

The amount you can deduct can be limited if your mortgage balance is more than $1 million ($500,000 if married filing separately) or the mortgage was taken out for reasons other than to buy, build or improve your home.

Points

Points (aka loan origination fees, maximum loan charges, loan discount, or discount points) are generally treated as pre-paid interest and, as such, the full amount cannot be deducted in the year paid. Rather, the deduction must be taken over the term of the loan.

Real Estate Taxes

State or local real estate taxes can be deducted from your income if they are paid in the tax year. To qualify, the tax must be levied on the propertys assessed value, the taxing authority must charge a uniform rate for properties in its jurisdiction, and the tax must not be for your special privilege but for the benefit of the general welfare.

Restrictions on Itemized Deductions

The amount of itemized deductions you can take are restricted by your adjustable gross income. In 2003, the limits were $139,500 for single persons, persons filing as head of household or qualified widow(er), or married persons filing jointly; and $69,750 for married persons filing a separate return.

Non-deductible items

Many of the expenses related to owning your own home cannot be deducted from your income tax. These non-deductible items can include:

Most settlement costs, including (but not limited to) appraisal fees, notary fees, VA funding fees, and mortgage preparation costs
Insurance
Local assessments that generally add value to your home, such as sidewalks, sewers, etc.
Utilities
Domestic help
Depreciation

Check with the IRS

The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Youll need to consult with your tax attorney, CPA, or the IRS for current tax year rules, restrictions and regulations.

We are a direct lender mortgage bank with lending authorization in the following states for Conventional, HUD, FHA, VA, USDA, Reverse, and Commercial lending.

We are a direct lender with offices in various locations focusing on providing home loans to the people in the communities we serve throughout the United States. We are here to help borrowers achieve the dream of home ownership and help them take advantage of today’s real estate investment opportunities.

Our loan professionals are highly trained in all of the various loan products currently available. We are well prepared to answer any questions you may have about buying a home or to assist you with analyzing your current home loan. Simply put, they are here to help you make informed right-fit mortgage decisions.

The customer experience is our number one priority. Communication is a very important part of our business model and our unique loan process, and our investment in technology reflects just that. We have mastered the ability to effectively communicate with all parties involved on each and every transaction keeping everyone up-to-date from the first phone call through funding. Our goal is to use all of our resources to make your transaction as smooth and efficient as possible.

With the experience, resources and exceptional service standards, you will see why we deliver…simply better home loans as we are working to expand our lending in other states as well.