There are some often forgotten about write offs during the home buying process. Take advantage of what the government is offering, you can’t go back and do it later if you know someone buying a home, please forward this information to them. These are just a few examples. Always consult your tax professional for the whole story!
Points:
According to the IRS, to use points paid on a loan as a write off, the points must be paid for the use of money and not as a service fee to the lender. For example, paying points to obtain a lower interest rate is the valid tax deduction.
Pre-Payment Penalties:
Unforeseen circumstances often cause borrowers to pull out of their mortgages sooner than expected. Fortunately, pre-payment penalties are tax deductible, which helps ease the pain.
Pro-Rated Real Estate Taxes:
Even if the seller sent the tax collector the check, chances are the you paid a pro-rated portion of the taxes for the year at closing. Be sure to deduct your fair share.
Pro-Rated Mortgage Interest:
Depending on when in the month the home sale closes, you pay either a large or a small amount of pro-rated mortgage interest for that month. This is what makes your closing costs shrink towards the end of the month – less pre-paid interest to fork over. No matter how much, it’s a deduction. The Closing Statement (HUD1) will show just how much you’re due.
Home Construction Loan Interest:
You have a two year period to complete the construction of your principal residence to qualify this as a deduction.
Bonus Info!
Pat Thompson of Piccerelli, Gilstein & Company, LLP, is one of the foremost tax experts in Rhode Island. She was recently a guest on Residential Properties Real Estate Insight, and has prepared a comprehensive outline for tax strategies for homeowners and real estate investors. View the report here!
