It's tax time again, and homeowners that have a VA home loan or other home mortgage product may be eligible for allowed deductions per IRS Publication 530. For most, homeownership affords tax advantages that allow the homeowner to keep more of their hard earned money. Homeowners that are members of the Armed Forces may also qualify for tax credit extensions if they meet the criteria.
Below are some common homeownership tax deductions as well as the buyer homeownership tax credits for eligible members. For information specific to your tax situation please consult a licensed tax professional or visit www.irs.gov for more details.
Most home buyers take out a mortgage (loan) to buy their home. They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder.
Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). However, your deduction may be limited if:
The term "points" is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. A borrower is treated as paying any points that a home seller pays for the borrower's mortgage.
You cannot deduct the full amount of points in the year paid. They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage.
Exception. You can deduct the full amount of points in the year paid if you meet all the following tests.
Real Estate Taxes
You can deduct real estate taxes imposed on you. You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year.
Sound Off...What do you think? Join the discussion...
If you take certain name brand maintenance prescriptions, a new law will change your benefit. As of October 1, 2015, non-active duty Tricare beneficiaries who use name brand maintenance medications are required to use either the Tricare mail order pharmacy or military pharmacies for these prescriptions. Beneficiaries who keep using a retail pharmacy for these drugs will […]