If you purchased a home in the past year, it 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 and energy credits, among other things.
Before you begin preparing your tax return, familiarize yourself with the write-offs that you may now be able to claim:
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.
You may take a deduction for real estate tax amounts paid during the year.
(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.
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.
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.