Don't you just love thinking about taxes?  It gives me a lump in my throat and a knot in my stomach!  Every year, I find myself kicking myself wishing I had given a little more time and energy at the BEGINNING of the year to prudent tax planning. 

Owning a home does have tax advantages.  They aren't set in stone, and they can and do change, but here are items to remember as you prepare to file your 2011 taxes.  If you bought a home this year, congratulations, you'll have more deductions!

  Remember to consult your tax advisor about what expenses you can deduct:

  • Mortgage interest and real estate taxes.  Washington keeps kicking around the idea of removing or modifying the mortgage interest dedutction...NOT a good idea in my humble opinion!
  • If you bought your home this year, deduct any money you paid toward points or origination fees.  You can find this on your closing statement, or your loan documents...if you can't find those, contact your real estate agent or your loan officer!
  • If you have an adjusted gross income of $100,000 or less, you may be able to deduct premiums for PMI (Private Mortgage Insurance).  This is only allowed on loans that originated after December 31, 2006 and before January 1, 2011.
  • If you moved 50 miles or more for a new job, deduct packing, moving and storage of your your household goods
  • Remember to keep all receipts of permanent home improvements AND mortgage closing costs...they can be figured into the adjusted cost basis of your home when you go to sell.  Right now you are not subject to capital gains tax on sale profit of $500,000 for married couples and $250,000 for single owners, but I bet that will change in the future - that's when you will need these expenses!
  • If you did a short sale on your primary residence this year, the debt discharged by your lender may be excluded from your taxable income.  If you are considering a short sale, please please please talk to legal and tax advisors!
  • Green Tax credits include insulation, windows, heating and cooling systems and water heaters...high efficiency refrigerators, clothes washers and dishwashers.  It's my understanding that this expires December 31, so if that hot water heater or washer or fridge is limping along, you might want to head out to the appliance store today.  I think I have a coupon for Lowes...I can email it to you if you contact me today!