Filing taxes is easily one of the more stressful things that you may have to deal with throughout the year, especially if you are a new homeowner. While each person may have different deductions, types of income, and write offs, there are a few things you need to know when it comes to your home and your taxes.
When owning a home, you will receive an annual mortgage statement from the carrier of your home loan. This statement is needed in order to file, and in most cases will be a 1098 form. This form will have all of your mortgage interest paid, which is tax deductible and can be claimed on your yearly tax filing as long as you paid more than $600 annually in interest.
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If you own your home as an individual, you can qualify for the mortgage interest tax break on home loans up to $350,000 and if you jointly own a home and file your taxes jointly with the other borrower, home loans can reach $750,000 and still be approved for the credit.
In some cases, you may also be able to write off some of the property taxes you paid throughout the previous year. New York is one of the states that sees this write off the most frequently as both state and local taxes are high.
Additionally, pending on your income as well as your loan, you may also qualify to write off your Private Mortgage Insurance, also referred to as PMI. If you put 20% down on your home purchase then your loan will most likely not have PMI, however for those who put a smaller down payment, you will pay a PMI premium monthly, included within your regular mortgage statement. The PMI you’ve paid can be written off in most cases.
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Lastly, with so many American’s working remotely due to the current pandemic, you may qualify for a home office deduction. If you work from home and have a specific area that is designated for work purposes only, whether a full office space or a small desk, you may be eligible to write off the space as a home office and receive a credit back on your taxes.
If you aren’t sure what write offs you qualify for, it is highly recommended that you meet with a tax professional who can help assist you with your filing to ensure that it is accurate, and your specific deductions, income, and any other write offs are filed correctly.
If you’re currently searching for a new home, are ready to sell your home and in need of a qualified seller’s agent, or if you have any questions regarding New York Real Estate, please feel free to contact our office at any time.