Real Estate Investing

Although April 15th is still almost three months away, people expecting to receive money back from Uncle Sam are already filing their tax returns.  Since becoming a real estate agent, my husband and I wait until April to file.  Though I save throughout the year and make quarterly payments, I still end up having to pay on April 15th.

Kiplinger’s has offered an article on the 11 Most Overlooked Tax Deductions and at least two are real estate related:

1.  Moving expenses to take first job.  Here’s an interesting dichotomy: Job-hunting expenses incurred while looking for your first job are not deductible, but moving expenses to get to that first job are. And you get this write-off even if you don’t itemize. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area, including 19 cents per mile for moves during the first six months of 2008, and 27 cents per mile for job move-related driving after June 30 (plus parking fees and tolls) for driving your own vehicle.
2. Refinancing points. When you buy a house, you get to deduct points paid to obtain your mortgage in one fell swoop. When you refinance a mortgage, however, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year if it’s a 30-year mortgage—that’s $33 a year for each $1,000 of points you paid. Doesn’t seem like much, but why throw it away? Also, in the year you pay off the loan—because you sell the house or refinance again—you get to deduct all the points not yet deducted, unless you refinance with the same lender. In that case, you add the points paid on the latest deal to the leftovers from the previous refinancing and deduct the expense, which is pro-rated over the life of the new loan.

Read the article for more tax tips.

The Menkiti Group offers further tax tips for homeowners.

For most people, the biggest tax break from owning a home comes from deducting mortgage interest. Your lender will send you Form 1098 in January listing the mortgage interest you paid during the previous year. That is the amount you deduct on Schedule A tax form. Be sure the 1098 includes any interest you paid from the date you closed on the home to the end of that month. This amount is listed on your settlement sheet for the home purchase. You can deduct it even if the lender does not include it on the Form 1098.

Be on the lookout for your W-2 forms coming by the end of this month.  Taking your receipts and other tax information to an accountant, tax attorney, or tax preparer may be well worth the cost and effort.