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Offered by Jan Hepp-Struck

Hepp RealtyIt’s that time of year we all dread… Tax Season. There are a number of potential deductions that come with homeownership, and are sometimes overlooked by homeowners. Here’s a helpful checklist to discuss with your tax preparer to make sure you are getting the maximum benefits you deserve!

Loan fees for home improvement: A loan fee paid for a home improvement loan is fully deductible in the tax year it was paid.

Loan fees for a home loan refinance or borrowing against other real estate: If you refinanced your existing home loan last year, or borrowed against other real estate, any loan fee(s) you paid are deductible over the life of the mortgage.

Home purchase mortgage: If you purchased a home last year any loan points paid at closing to decrease the loan or lower your interest rate qualify as an itemized interest deduction.

Undeducted loan fees: Deduct any previously undeducted loan fees from prior mortgage refinancing.

Prorated mortgage interest: If you bought a home (or other real estate) and took over an existing mortgage, you can deduct your prorated interest share for the month of the sale (even if the seller made the payment to the lender). Your closing settlement statement should show your prorated share of mortgage interest.

Mortgage prepayment penalty: A prepayment penalty qualifies for an itemized deduction if you paid off an existing mortgage early and incurred a prepayment penalty fee.

Home construction loan interest: You can deduct the construction loan interest paid if the construction period does not exceed 24 months before occupancy of your principal residence.

Deduct prepaid property taxes and mortgage interest: You can deduct from last year’s income tax return, any extra mortgage interest and/or property tax payments prepaid in December for this year.

Deduct prorated real estate taxes if you bought/sold property last year: Frequently overlooked, prorated property tax paid at the close of escrow can be a major tax deduction. Even if the other party remitted the payment to the tax collector, if you were charged a prorated portion of the tax bill, be sure to deduct your share on your last year’s return.

Land rent payments can qualify as interest deductions: Internal Revenue Code 163(c) allows land rent to be deducted like interest when the lease: (a) is for at least 15 years, including renewal periods; (b) is freely assignable; (c) contains a present or future option to buy the land; and (d) is like a security interest, such as a mortgage. Payments to buy the land and ground rent payments are not deductible if you do not have the option to buy the land.

Each tax situation is unique. This information is provided as a general reference, and deductions are subject to confirmation by your chosen tax expert.

For proven expertise in establishing your home value and/or searching for a new or existing home, please call Jan at (303) 520-4340.

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