Don’t Use Escrow Amounts – If your lender uses escrow funds for your property taxes, don’t just assume the usual amount you pay into your escrow account monthly is the actual tax figure. For example, you may have accumulated $1,300 dollars in escrow over the full year, but your actual tax bill is only $1,200. Your lender will usually adjust your payments to realign the figures next year, but you can only use the $1,200 actual figure. You will receive an official statement from your lender each year listing the correct figure of taxes paid.
Make Sure You Deduct The Correct Year – You need to ensure that you use the figures you actually paid in the year, not the billing year. Some authorities can work a year behind, only billing you for property taxes from 2013 in 2014. You need to make sure that you use the figure you paid in 2013, regardless of the date on the bill.
Confusing Home Office Deduction Figures – This can be a tricky one as it is complicated. It is often more trouble as it can cause excess scrutiny of your return, needs to be recaptured if you sell your home with a profit, and is usually not much of an actual deduction. The best advice is to only claim it if it’s really worth it.
Not Repaying First Time Homebuyer Credit – This can be done on an IRS tool as it can get puzzling. If you used the original tax credit in 2008, then you must repay it over the next 15 years, i.e. 1/15 per year. If you used it in 2009 or 2010 and then ceased using the property as your primary residence or sold the home within 36 months of purchase, you also need to pay the credit back.
Deducting Points Paid When Refinancing -You must deduct the points equally over the duration of the new loan. For example, if you paid $3,500 in points when you refinanced for a 15-year term, your deduction would be $233 per year.
Failing to Keep Track of Home Expenses And Capital Gains – You must keep a file of expenses as you go for your return and don’t forget to pay taxes for any profit if you sold your home last year. There are time limits and exclusions, so you need to double check to find out what your allowance is.
If you are interested in learning more about tax deductions, Stephenville homes or any Erath County homes,
then please contact us. We would be happy to assist you with any questions you have pertaining to homes in the area.