While being a homeowner is often exciting and fulfilling, it also comes with many responsibilities. Once in awhile, it’s nice to remind yourself of the perks that can come along with it – like tax deductions. If you haven’t submitted your 2012 tax returns, here is some information on deductions offered to homeowners.
Bought a Home?
If you moved because of job relocation (excluding military orders), you may be able to deduct the moving expenses, as long as you meet the following requirements:
1. Your new job location is at least 50 miles farther from your old home than your previous job. If you were not previously employed, your new job location must be at least 50 miles from your old home
2. You must work full-time for at least 39 weeks during the first year immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first year and for a total of at least 78 weeks during the first two years immediately following your arrival in the general area of your new work location.
Took Out a Home Equity Loan?
If you took out a home equity loan, such as the fixed-rate, fixed-term options offered by NVE, the amount you can deduct depends on the loan purpose. A loan for any reason other than to buy, build, or substantially improve your home – e.g., tuition or medical bills – may qualify as home equity debt, and is limited to the fair market value of the home minus home acquisition debt, up to a total of $100,000 ($50,000 if married filing separately). In other words, part or all of the interest you pay on that loan could be deductible up to the previously stated amounts. On the other hand, generally speaking, you can deduct interest charged on a loan used to acquire or improve your principal residence in the year that it is paid.
Made Energy-Efficient Improvements?
If you made home energy improvements in 2012, you may be eligible for tax credits. Installing insulation, new windows, furnaces and solar electric systems are some examples, but not all energy-efficient improvements qualify. Be sure you have the manufacturer’s tax credit certification statement, usually found on the manufacturer’s website or with the product packaging.
Sold a Home?
If you have owned and occupied your principal residence for at least two of the past five years, you can earn up to $500,000 on the sale of that house without paying federal income tax on that income, if you file as married (single filers can get up to $250,000 tax-free). It doesn’t have to be two consecutive years, but using the home for vacation or rental income doesn’t count. If you think this might apply to you, read through qualification requirements on the IRS website in the section entitled, “Excluding the Gain.”
Remember, in addition to various exceptions, tax laws change from year to year, and from state to state. So, it is important to always consult with your tax preparer before making any claims or deductions.