Skolnick's Scoop / 'Tis the season for tax breaks
Updated 3:12 pm, Thursday, March 31, 2011
April 15 is rapidly approaching and many are still scrambling to complete their taxes. For those who have recently bought or sold a home, there are a number of tax deductions that may be available to you.
Real estate broker's commissions, title insurance, legal fees, advertising costs, administrative costs and inspection fees are all considered selling costs and may be used to reduce one's taxable capital gain by the amount of the selling costs. That could result in a big savings depending on the final sale price.
Interest that is paid on a mortgage is also tax-deductible, within limits. A married couple filing jointly can deduct all their interest payments on a maximum of $1 million in mortgage debt secured by a first or second home.
Homeowners are also able to deduct up to $100,000 of the interest paid on a home equity loan or similar line of credit.
Points or origination fees on a home loan paid during the purchase of a home are generally tax-deductible in full for the year in which they were paid.
Refinanced mortgage points are also deductible but only over the life of the loan -- not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.
If your lender required private mortgage insurance, the PMI premiums are tax-deductible for mortgages taken out from 2007 through 2011.
For those working from their new home: If a room is used exclusively for business purposes, they may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, and depreciation.
In some instances, if you have moved because of a new job, moving costs may be deducted. These can include travel or transportation costs, expenses for lodging, and fees for storing your household goods.
Every year the tax laws change and new tax deductions are introduced while others are phased out. If you have recently bought or sold a home, it's a smart idea to hire a professional tax consultant to do your taxes . Missing out on viable tax deductions can add up to big money.