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How to Manage Homeowner Tax Expenses

September 19th

tax deductionThe majority of homeowners are aware that owning a home comes with numerous valuable tax deductions. Notable among these are home mortgage interest and property tax deductions, both of which can contribute significantly to saving money.

Also among deductible expenses are the following:

  • House Payment. If you took out a loan to finance the purchase of a home, monthly payments usually have to be made. These typically include several costs pertaining to owning a home. However, the only ones of these that are tax deductible are real estate taxes, interest that qualifies as home mortgage interest, and mortgage insurance premiums.
  • Military or Clergy Housing Allowance. Ministers and members of the military often receive non-taxable housing allowances. The real estate taxes and home mortgage interest pertaining to these allowances may, however, still be deducted.

However, it is important to remember that not all housing expenses are deductible. Avoid penalties or other issues by ensuring that your tax return reflects only deductible expenses. Among non-deductible expenses are:

  • Insurance. No insurance payments may be deducted except for mortgage insurance premiums. This includes fire, title, and homeowners insurance.
  • Wages. Any wages paid for domestic help, including personal chefs, cleaners, or landscapers, are not tax deductible.
  • Utilities. No utility costs, such as gas, electricity, or water, can be deducted.

To deduct any of the expenses involved in purchasing or running a home, taxpayers must file a Form 1040 and itemize all deductions. Clear documentation of expenses must also be provided in the form of receipts, photos, and other records. If you have any concerns or questions regarding which particular homeowner expenses may be deducted, contact a qualified tax attorney. A tax attorney will be able to advise on not only which expenses are deductible, but also how to approach filing for such deductions on your tax return.

 
 
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