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The Most Popular Tax Deductions For Homeowners

In Denver Real Estate | on September, 17, 2012 | by | 0 Comments
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Homeowners like to save money. Whether it’s a decision to refinance, add energy efficient windows or heating or cooling system, there are many ways to unlock “secret” value in your home. But the best way a Real Estate Agent Denver would advise you of is annual tax deductions.
Here are the top tax deductions to be aware of.

  • Refinancing expenses for your Colorado Real Estate. If you refinanced and paid points or a fee based on the loan amount, you may qualify for a deduction. But unlike points paid on a new mortgage, those paid on a refinance are written off over the life of the loan. Each point generally equals one percent of the loan value.
  • A Realtor in Denver also knows about foreclosures and mortgage workouts. If a lender forgives a debt, that amount is normally considered taxable income, but a 2007 tax law allows homeowners to exclude the forgiven debt on their income tax return. The same goes for those who lost their home through foreclosure, but a homeowner who lost money as a result are not able to claim it on their returns.
  • Energy efficiency upgrades, which are a big topic of discussion in real estate school Denver. 2012 is the last year that homeowners may claim deductions if they’ve installed energy-efficient exterior windows and doors, heat pumps, furnaces and insulation under a law that expired on Dec. 31. Up to 10 percent of the price of the improvements may be claimed and a lifetime limit of $500. Of this amount, only half can be used for windows. Alternative energy equipment like solar water heaters, solar panels and certain wind or geothermal projects could be worth a credit of up to 30 percent of the cost of installation. And best of all, there is no cap on this credit. Certain household appliances like an energy efficient dishwasher may qualify for a small credit.
  • A Denver Real Estate Agent may also be able to advise you about mortgage interest. For homeowners whose mortgage loan is less than $1 million, the biggest tax break they earn is reflected in their monthly payment, most of which goes toward interest. And all that interest is deductible. But interest tax breaks don’t end with your home’s first mortgage – they can apply to a refinancing, or even a home equity loan or line of credit. For the most part, equity debts of $100,000 or less are fully deductible.
  • Patrick Murray Realty can also advise you about general real estate related taxes. Your biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest. And all that interest is deductible, unless your loan is more than $1 million. If you’re the proud owner of a multimillion-dollar mortgaged mansion, the Internal Revenue Service will limit your deductible interest. Best of all, interest tax breaks don’t end with your home’s first mortgage.

A final deduction to be aware of are medical expenses. If your Denver realty requires renovation due to a medical condition for you or a dependent, you may be able to claim the cost as a medical expense on your income tax. But the costs only apply if they are more than 7.5 percent of adjusted gross income, which is a high bar for most homeowners. However, installing a ramp, widened doorways, or lowered countertops to accommodate a wheelchair could make it easier to reach. That’s because these are considered medical expenses, along with doctor bills and prescriptions.

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