One of my absolute favorite websites is HouseLogic.com. Every time I visit I get lost going from one article to the next and end up spending at least an hour reading and not doing whatever else I had planned to do with that hour. It is what I call a “good problem to have.”
Recently, I found myself once again lost on the site and came across some timely information about tax season. Actually, it may not be as timely as some of you may have liked since you are most likely reading this on Sunday, April 17 and “D-day” for taxes is tomorrow, Monday, April 18. At this writing I am anxiously hoping I am done with my taxes by the time you are reading this.
On my latest voyage in to HouseLogic I found some fantastic tips from guest contributors G.M. Filisko who is an attorney and award-winning writer, and Mike DeSenne who is the money and work editor with AARP.org and a former executive editor of SmartMoney.com.
Here’s a taste what I found particularly interesting. There is plenty more where these thoughts came from so make sure and log on yourself at www.HouseLogic.com.
Remember, neither they nor I am a tax professional, doctor or soothsayer (and I never portend to be one), so make sure after reading this you consult a tax professional or attorney. Please, do not rely upon this column for tax or legal advice.
Don’t miss the first-time home buyer tax credit!
If you met the midyear 2010 deadlines, kudos to you. However, don’t forget to take this tax credit into account when filing.
Plus, there is a possible bonus for Arkansas military families who might have missed the 2010 deadlines. Congress extended the first-time home buyer credit for military families and other government workers on assignment outside the United States. If you meet the criteria, you have until April 30, 2011 to sign a contract on a new home and until June 30, 2011 to close on your first home and qualify for the tax credit of up to $8,000. Longtime homeowners can earn a credit of up to $6,500. The same income restrictions and $800,000 cap on home prices apply.
And thank you for your service to our country.
Don’t deduct the wrong year
According to Filisko, you take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind—that is, you’re not billed for 2010 property taxes until 2011. But that’s irrelevant to the feds.
Enter on your federal forms whatever amount you actually paid in 2010, no matter what the date is on your tax bill.
Take advantage of that vacation home
According to DeSenne, while tricky, there are some good tax deductions for those of you with vacation homes.
If your vacation home is a home meant for your personal enjoyment and not rental income, you can usually deduct mortgage interest and real estate taxes. Furthermore, you can even rent out the home for up to 14 days during the year without getting taxed on the rental income.
If you restrict your annual personal use to fewer than 15 days (or 10% of total rental days, whichever is greater), you can treat your vacation home as a rental-only income property for tax purposes.
According to DeSenne’s piece, in addition to mortgage interest and real estate taxes, rental-only income properties are eligible for a number of tax deductions for everything from utilities and condo fees to housecleaning and repairs.
Don’t misjudge the home office tax deduction
According to Filisko’s article this deduction may not be as good as it seems. It often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. Yikes!
Don’t fail to track home-related expenses
Make sure you track home office, home maintenance and repair expenses and keep the receipts. For example, save each manufacturer’s certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.