Tax Deductions

What you can and cannot deduct

To deduct expenses of owning a home, you must file Form 1040 and itemize your deductions on Schedule A. If you itemize, you cannot take the standard deduction. If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and mortgage interest.

Deductible Expenses

Mortgage Insurance Premium - Beginning in 2007, premiums you pay for "qualified mortgage insurance" in connection with home acquisition debt are deductible as an itemized deduction. This is a one-year provision unless Congress acts to extend the allowance. The amount you can deduct phases out by 10% for every $1,000 which your adjusted gross income exceeds $100,000 (the phase out is 10% for every $500 of AGI over $50,000 if married filing separately). Other limits and qualifications apply, so you may wish to have your situation reviewed for deductibility.

Real Estate Taxes – Most state and local governments charge an annual tax on the value of real property.

Mortgage Interest – The interest must be on a loan secured by your main home or a second home. The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. You can also deduct late payment charges and prepayment penalties for paying off a mortgage early.

Points – The term "point" is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may include loan origination fees, maximum loan charges, loan discount, or discount points.

Sales Taxes – Sales tax paid on home building materials.

Non- Deductible Expenses

Fire or Homeowner's insurance premiums.

FHA or other mortgage insurance premiums.

Home owner Association fees

Depreciation

Note: You will have to meet the IRS rules to qualify for these deductions. If you have questions about please call our office at (210) 340-8855.

There may be other items that you can deduct in additions to the ones listed above. Please consult your tax advisor.