05 Feb Tax Preparation for Homeowners
Tax day – April 15 – will be here before you know it and there is no time like the present to begin preparing your information and documentation. Being a homeowner comes with some great benefits including it is a good investment, not paying rent and building equity, but the benefit that stands out to most people is the opportunity to enjoy a few tax deductions but in order to qualify for these deductions and credits, you must have the correct information.
In addition to the standard proof of your income and wages you receive in the W-2 and 1099 forms, homeowners need to be prepared with the following other documents:
- Mortgage Contract: These documents contain essential information like the points paid on your loan and escrow account details. Points can be deducted under the Home Mortgage Interest Deduction. And as you take out home improvement or home equity loans, these documents are important to keep in order to support information you may use to obtain deductions on your taxes.
- Major Home Improvement and Renovations Receipts: Maintain a file of receipts and canceled checks for supplies, labor and materials.
- Form 1098: Homeowners with mortgages are generally eligible for the Home Mortgage Interest Deduction, and this document will remind you how much you paid last year. Lenders are required to send you one of these forms if you paid at least $600 interest. other information often found on this statement includes amounts paid toward points to get the loan and escrow disbursements for real estate taxes (also deductible) and property insurance (not deductible).
- Mortgage Credit Certificate (MCC): If your loan had a Mortgage Credit Certificate attached, this will be redeemed when you file your federal taxes. An MMC is a document provided by your mortgage lender that converts a portion of the paid mortgage interest to a non-refundable tax credit.
Other potential deductions include
- Home office deduction
- Renting our your home
- Property taxes both state and local
- Capital gains from a selling a home
Please reach out to one of our local mortgage planners at Fairway Independent Mortgage of the Carolinas if you need a recommendation for a trusted business partner who can explain the tax benefits available to you. We are truly interested in providing a mortgage experience that will set the stage for your financial future. Our goal each day is simple – help people do better in life. Let us change the way that you think about mortgages.