One of the most common mistakes home owners make when filing their taxes is not taking advantage of all the deductions available to them. As a homeowner with a mortgage, there are several tax deductions you can take advantage of that can save you money come tax time. Here are some tips on how to avoid common tax mistakes when filing as a homeowner with a mortgage:
1. Understand Your Mortgage Interest Deduction: Your mortgage interest deduction is one of the largest deductions available to homeowners, and it can add up to significant savings over the life of your loan. When filing your taxes, make sure you understand how much of your interest payments are deductible, as well as any other costs associated with your home loan (such as points). The IRS has an online calculator that can help you estimate your mortgage interest deduction.
2. Maximize Your Property Tax Deduction: Property taxes can be an expensive part of homeownership, but they’re also tax deductible. Make sure you’re taking full advantage of this deduction by maximizing it each year. This means accounting for any increases or decreases in the amount you pay each year and adjusting your deductions accordingly.
3. Consider Refinancing: If you’re looking for ways to reduce your monthly payments or lower your overall loan cost, consider refinancing your mortgage. Refinancing could give you access to lower rates or longer terms that could save you money in the long run and also increase the amount of money eligible for deduction on your taxes. Be sure to run the numbers carefully before making this decision – refinancing isn’t always beneficial, so do some research beforehand!
4. Don’t Forget Capital Gains Exclusion: If you decide to sell your home at some point in the future, then make sure not to forget about capital gains exclusion rules – these let homeowners exclude up to $250,000 ($500,000 if married) from capital gains on their primary residence! This means that if you sell for more than what you originally paid (minus depreciation), then only the gain over $250K is taxable.
5. Stay Organized and Keep Records: To ensure that you’re taking full advantage of all deductions available as a homeowner with a mortgage, stay organized and keep records throughout the year. This includes keeping track of things like mortgage statements and property tax bills so that everything is easy to access come tax time!
Filing taxes as a homeowner with a mortgage doesn’t have to be daunting – understanding which deductions are available and staying organized throughout the year can help ensure that you get all of the savings available come tax time!