Are you a homeowner in Missouri? The Boehmer Team would like to make sure that Missouri homeowners get the most from their tax return. The following deductions
can result in valuable tax savings for taxpayers who itemize. For
reference while doing taxes, IRS publication 530 specifically covers “Tax
Information for Homeowners”.
1. Mortgage Interest
Is Tax Deductible
Did you paid interest on your mortgage last year? Claim it! Don’t forget that mortgage interest
and taxes are also generally deductible for second homes, too.
2. Mortgage Points
Are Tax Deductible
If you bought a home in 2015 with a mortgage, then in
addition to the mortgage interest (which may not be a lot if you bought late in
the calendar year), you can probably write off the points (both origination and discount points) on your tax
return. The challenge is whether you’re eligible to deduct the points all at
once, or whether you have to spread the costs out over the life of the loan.
Generally, if you bought your first home or got a loan on that first home, you
can take the deduction all at once, the IRS says. For a second home, and often
for a refinance on a first home, the IRS says you most likely have to spread it
out.
3. Property
Taxes Are Tax Deductible
Many taxpayers overlook the fact that homeowners can deduct local, state and
even foreign real estate taxes on their federal returns. Lower-income
homeowners may also get special property tax benefits from their state or municipality, so look into further breaks
specific to your community. 4. Mortgage Insurance is Tax Deductible
The cost of insuring a home mortgage is deductible up to certain income limits. If your adjusted gross income is more than $109,000 ($54,500 if
married filing separately), you cannot deduct your mortgage insurance premiums.
5. Interest on Home Equity Loans are Tax Deductible
Interest on home equity loans and home equity lines of credit are tax
deductible.
6. Discount Points are Tax Deductible
Discount points are normally deductible when purchasing a home. So if you
purchased a home in 2015 they are deductible. But when refinancing, they are
typically amortized.
7. Losses From Weather, Fire or Theft May Be Tax Deductible:
“If your home is damaged as a result of fire, flood, or similar event, you may
be able to take a deduction for the loss. To do so, the property must be
damaged, lost or destroyed by a sudden, unexpected or unusual event. Loss
cannot be gradual, such as insect damage or water damage from a leaky roof,”
according to Stacy
Champagne of accounting firm T.A. Ohlms, LLC. “The amount of the deduction is generally determined by the difference in the fair market value of the property before and after the loss, OR by the cost of the necessary repairs to restore the property to its original condition. After the loss is determined and the insurance reimbursement subtracted, the loss deduction is generally reduced by $100 for each casualty, any casualty gains, and 10% of your adjusted gross income.”
While nobody wants a tree to fall on their house or for burglars to make off with their flat screen, the IRS grants a break to any property or casualty loss that is more than 10% of your gross income and is not reimbursed by your insurance. Documentation is key, both to prove values and the circumstances under which something was lost. Casualty losses are reported on Form 4684 and deduction on Schedule A.
Champagne of accounting firm T.A. Ohlms, LLC. “The amount of the deduction is generally determined by the difference in the fair market value of the property before and after the loss, OR by the cost of the necessary repairs to restore the property to its original condition. After the loss is determined and the insurance reimbursement subtracted, the loss deduction is generally reduced by $100 for each casualty, any casualty gains, and 10% of your adjusted gross income.”
While nobody wants a tree to fall on their house or for burglars to make off with their flat screen, the IRS grants a break to any property or casualty loss that is more than 10% of your gross income and is not reimbursed by your insurance. Documentation is key, both to prove values and the circumstances under which something was lost. Casualty losses are reported on Form 4684 and deduction on Schedule A.
8. Energy efficiency
Tax Credits
Congress recently extended the “Nonbusiness Energy Property
Credit” for installing energy efficient windows, fans, air conditioners,
etc. The credit allowed is up to 10% of the purchase price of qualified
products, up to a maximum of $500 for all of your home improvements (maximum
for windows is $200). The $500 is a “lifetime” cap. Written
certification from the manufacturer is needed.Another credit available is the “Residential Energy Efficient Property Credit.” This could be worth up to 30% of the cost of installing certain renewable energy sources in your home and may be claimed for newly constructed homes. This includes solar hot water heaters, solar electric equipment, and wind turbines. There is no dollar limit on the credit for most types of property. Use Form 5695 to figure your residential energy credits.
9. Some Home
Renovations Are Tax Deductible
Generally you cannot take a tax deduction for renovations. The
amounts spent are added to the cost basis of your home, so you should keep
track of them. If you obtain a home equity loan or home equity line of
credit to fund the renovations, the interest would be deductible (up to IRS limits).“Home improvements made for medical reasons, however, can be tax deductible,” says Stacy Champagne of T.A. Ohlms, LLC. “If you are making home improvements to accommodate a chronically ill or disabled person, and the renovations do not add to the overall value of the home, the project costs are typically deductible as medical expenses on Schedule A. Examples are entrance/exit ramps, widening doorways of hallways, installing railings/support bars and other bathroom modifications, modifying stairways, etc. Be sure to save your receipts.” Note: total Medical expenses (on Schedule A) must exceed either 10% of your adjusted gross income (if born 1951 or after – otherwise it’s 7.5%)
10. Missouri-Specific
Tax Credit for Homeowners
Champagne also says that for Missouri homeowners, “The
Missouri Property Tax Credit Claim is a program that allows certain senior
citizens and disabled individuals to apply for a credit based on real estate
taxes or rent they have paid for the year.” Details can be found at http://dor.mo.gov/forms.
How The Boehmer Team Helps at Tax Time
Did you know that The Boehmer Team sends a tax settlement letter to all their clients who bought or sold a home the previous year? We go above and beyond so that you don't have to hunt for your paperwork when tax season comes after a move. Just another reason to use The Boehmer Team.
References:
- Stacy H. Champagne, CPA, Partner at T.A. Ohlms, LLC 4600 Executive Centre Parkway, Suite A, St. Peters, MO 63376 stacy@taohlms.com
- https://www.energystar.gov/about/federal_tax_credits
- https://www.irs.gov/publications/p936/ar02.html
- http://www.marketwatch.com/story/10-homeowner-tax-breaks-you-should-be-taking-advantage-of-2015-04-02
- http://www.usatoday.com/story/money/personalfinance/2015/04/04/irs-taxes-homeowner/23938151/
- http://dor.mo.gov/forms
