The deadline for filing taxes is right around the corner and so today we are going to discuss some of the common questions that come up for homeowners regarding home and taxes.
Please keep in mind this Q&A is only meant to provide you information and steer you in the right direction. Consult with your tax professional or real estate law professional if you are unsure about anything.
Homeownership and Tax Deductions Q&A
Q. If I spent a lot of money fixing up my home, what can I claim as a deduction? A. Odds are, you can’t deduct expenses incurred doing minor repairs to the home. However, if you made significant improvements ( i.e. new windows, new roof, new heating and air, etc. ) hold on to your receipts and ask your tax professional what to do w if you can make any adjustments to the home’s basis.
Q. Can I write off the portion of the money my real estate agent received as a commission? A. You can’t deduct commissions for the sale of a personal residence, but you may be able to add this amount to the home’s basis as the cost of sale. Speak to your tax professional about your options.
Q. Can I write off the real estate lawyer fees? A. No. Legal services are considered personal in nature and not deductible on your tax return.
Q. Can I write off my tax lawyer/accountant? A. Yes! You can generally deduct fees for tax advice and preparation services paid i.e. your tax attorney and your accountant fees. Keep in mind thought, to claim the deduction, you must itemize your deductions and you’ll have to meet the 2% floor for miscellaneous deductions. Keep receipts and consult with your tax professional about your options.
Q. If I prepaid my real estate taxes for the entire year prior to selling my home, can I claim the taxes I’ve already paid? A. Yes, generally you can deduct real estate taxes paid on the value of your property. If you have already paid your real estate taxes for the year and then you sell after that, you can claim the taxes paid adjusted with any reimbursements. Often the buyer will reimburse the seller the pro-rated share of taxes already paid at settlement. Then for tax purposes, you can deduct the difference between what you prepaid and what you were reimbursed. Again, present this to your tax professional using your settlement sheet and they will help you figure your actual deduction.
That’s all for now! Join us next week in Homeowners and Taxes, Part 2 when we go over a few more common Tax and Homeownership Q&A’s. If you have any questions about buying a new home or selling your existing home, feel free to reach out to us here at Lendem Financial Mortgage Co .
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