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Tax Considerations >Tax Breaks

Most homeowners are keenly aware of the interest tax deduction on their home loan, but there are many other tax breaks which are often overlooked at income tax time. Pro-rated property taxes and mortgage interest in the year of sale are deductible. You will find these amounts listed on your closing settlement statement. If you paid off your mortgage and had to pay a pre-payment penalty, it qualifies as tax deductible interest. If you paid an “acquisition mortgage loan fee” on a home loan, this fee can be deducted as itemized interest. Home improvement loan fees are also deductible. Any remaining loan fees from re-financed or paid-off mortgages are fully deductible at the time of the mortgage payoff.

Certain items don’t qualify as deductions, but can be added to the cost basis of your home, such as transfer taxes, recording and title fees, and special local property tax assessments for new sidewalks, streets, or sewers.

Don’t be intimidated by the tax code! A little research or consultation with an expert can help you maximize your real estate tax advantages.

Real Estate Trivia

Q What real estate term was first used in the 19th century and means “a high-flying flag on a ship”?

A Skyscraper was first used in the 1880s when office buildings of 10 stories or more were built in Chicago and New York.