February 3, 2014
If you purchased a home in the past year, 2013 may be the first tax year in which you itemize your deductions instead of claiming the standard deduction. "Not only will you be able to deduct the amount you paid in interest on your mortgage, but when you itemize you will also be able to claim state taxes, charitable donations, home improvements, and energy credits, among other things." explained Paul Stanley of eTax.com
"Before you begin preparing your tax return, familiarize yourself with the write-offs that you may now be able to claim:"
Mortgage/home equity loan interest and points: You can write off interest paid on mortgages (of up to $1,000,000) or on home equity loans (of up to $100,000). You will receive Form 1098 from your lender listing the amount of interest paid during the tax year. "Points" paid to the lender to get your mortgage may also be deductible.
Property taxes: You may take a deduction for real estate tax amounts paid during the year.
Mortgage insurance premiums: PMI (Private Mortgage Insurance) is usually required for mortgages on which the down payment was less than 20% of the total. If you bought your home during or after 2007, you can write off your PMI premiums.
Penalty-free IRA payouts: As a first time homebuyer, you may break into your IRA and withdraw up to $10,000 without paying a penalty if using the money to help buy or build a home.
Energy credits: You may reduce your tax payment dollar for dollar (up to $500) by claiming a credit for some home improvements that will improve the energy-efficiency of your home.