Owning a home can have its advantages, including offering certain deductions when homeowners itemize at tax time.

Tina Barrett, CPA, named the home mortgage interest and property tax deduction; the home office deduction; energy credits and “exclusion for the sell of a personal residence” as the most commonly used tax breaks for homeowners.

The mortgage interest deduction allows homeowners to “write off” the interest portion of their monthly house payment for the tax year. Mortgage interest on a second home is also deductible, Barrett said. Sometimes these second mortgages can be for an RV or boat, as long as the RV or boat has a bath, cooking and sleeping facilities. It’s also possible that you can rent out the second home, RV or boat, as long as you stay there more than 10 percent of the days that you rent it out. It’s best to check with your tax preparer or CPA for specifics.

According to Barrett, it’s not necessary to have a home-based business to take advantage of the home office credit. “You must use the office exclusively for business,” Barrett said.

Home energy tax credits allow for a 30 percent reduction in tax liability for the expense of buying and installing environmentally friendly equipment like solar panels and geothermal heat pumps. Energy Star brand certified products do not qualify for a tax credit and credit for certain appliances, windows and doors will not be offered this year by the IRS.

The exclusion for the sell of a personal residence may allow the homeowner to exclude from income any gain up to a limit of $250,000 or $500,00 for joint return, according to Barrett.

According to the IRS website, “The Mortgage Debt Relief Act generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure qualifies for the relief.”

This article is meant to be a reminder that certain tax break and credit programs are available for home owners. For more details, consult your tax preparer or a CPA such as Barrett. Consult a lending institution such as Louisiana Mortgage Associates for more information about the Mortgage Credit Certificate.

(MGNonline)