If you're a first time Vero Beach home buyer, there may be some important things you already know about, like things you now have to take care of yourself that a landlord used to do for you. But being a homeowner also affects tax deductions you can take to help lower your tax bill.
Now that we're in full swing for taxes, we've put together this list of what you can and can't deduct, along with other tips for tax season.
What Can Be Deducted by a Vero Beach Home Buyer
As a new Vero Beach home buyer, a new mortgage means a little more work for you when it comes time to file your taxes. However, the extra work is worth it in the end. Perhaps the most important tax deduction you need to be aware of is your mortgage interest. At year-end, refer to Form 1098 from your lender to see how much mortgage interest you paid. This is still deductible, though it may not be forever, so take the deduction while you still can.
Mortgage points are nothing more than prepaid interest. You can buy points to lower your interest rate when you get your loan. By purchasing points, you can save money in the long run if you stay in the home for a certain period of time, depending on the amount of points you buy.
For example, if you have a $300,000 mortgage and buy two points, you'll owe $6,000 for those points at closing. (Each point is 1% of the value of your mortgage.) If buying the points lowers your payment $250 a month, you’ll have to stay in your home for at least 16 months to break even. After that time passes, you'll start putting money back in your pocket.
Are you eligible to deduct money you spent on mortgage points from your taxes? Each situation is different, but it's definitely worth looking into. Ask your accountant or tax attorney.
Becoming a Vero Beach home buyer also gives you the responsibility of paying property taxes. In most cases, your taxes are rolled into your monthly mortgage payment, and your mortgage company pays your taxes from your escrow account when they're due.
If you're a first-time Vero Beach home buyer, you'll need to know the total real estate taxes for the real property tax year and the number of days in the property tax year that you owned the property. This is usually handled at closing by a closing attorney, if you had one.
Private Mortgage Insurance (PMI)
Thanks to a bill the Senate approved in late December 2014, homeowners can deduct the cost of mortgage insurance premiums on their 2014 tax forms. The tax break covers PMI premiums and premiums paid on FHA, VA and Rural Housing Service guaranteed loans, according to an article on National Mortgage News.
What Can NOT Be Deducted by a Vero Beach Home Buyer
Property hazard insurance premiums
Homeowners association dues
General closing costs
As you can see, purchasing your first home can have a major impact on your taxes. With a little research and perhaps some help from your tax professional, you can recoup some of the costs associated with becoming a Vero Beach home buyer.
Find more news articles as they relate to taxes in the Taxes section under our Vero Beach Real Estate Categories to your right. And find us on Facebook and follow us on Twitter for daily updates we post there as well.