Tax Day is April 17: Are you Ready?
Tax season is in full swing, and the April 17 Tax Day deadline is quickly approaching.
Wait a minute, you may be thinking. Tax Day is always April 15, right? Well, yes and no.
The regular IRS tax return filing date is April 15. But April 15 falls on Sunday this year, and the Washington D.C. Emancipation Day holiday is being observed on April 16 instead of April 15, so Tax Day has been moved to Tuesday, April 17. Got it?
The upside is the extension gives you a couple more days to get those taxes prepared.
We also need to talk about 2018. You have probably heard about the “Tax Cuts and Jobs Act,” a tax reform package passed early in 2018 that has resulted in many people seeing a little more money in their paychecks—obviously good news. (If you don’t know about all the changes, here’s a great article from Dave Ramsey that explains the changes.)
The 2018 legislation doesn’t affect your 2017 taxes though—those due on April 17, remember? So all the old rules pretty much apply to the taxes you are working on right now.
With all that out of the way, let’s talk about 2017 taxes. Homeowners can take several deductions that may reduce their overall tax bill for 2017. Your tax preparer can give you specific advice based on your individual situation, but we’ve gathered a few money-saving tax tips for homeowners. Read on.
Homeowners almost always benefit from itemizing rather than taking the standard deduction. That’s because many costs associated with borrowing money to purchase and maintain a home are tax deductible under IRS rules.
These deductible costs usually include:
- Mortgage interest
- Real estate taxes
- Home improvements
- Energy credits
- Home equity loans
- Mortgage interest (Source: TurboTax)
To take these deductions, you’ll need to collect the right paperwork. Ask your tax preparer what you need for documentation, but here are some items that are generally required:
Form 1098. If you have a mortgage loan on your home or a secondary residence (including an RV or boat that you use for vacations) or a home equity loan/line of credit, your lender will send you a 1098 listing the mortgage interest you paid during the previous year. If you made the purchase in 2017, check your settlement sheet. You may have paid interest from the date you closed to the end of the month that isn’t listed on the 1098 and that’s deductible, too. For 2017, you can deduct interest on up to $1 million of debt used to purchase a home, to purchase a second home, or to make home improvements. The 1098 also will show any points you paid the lender in order to get your mortgage. These points may be deductible as well.
Tax statements. You can deduct the local property taxes you paid in 2017. The amount paid may be shown on a statement from your city, county, or state government, and/or on a form you receive from your lender.
Records and receipts. Home improvements made in 2017 may not be deductible now, but always keep the receipts. The money you’ve spent improving your home may be a factor if you decide to sell your home. Energy-saving improvements are a different story. Check your state’s policies, but improvements that increase the energy-efficiency of your home may earn you a tax credit worth up to $500. Qualifying improvements might include skylights, outside doors and windows, insulation, roofs, and appliance updates to certain newer models.
Owning a home has many more benefits than tax deductions, but those are certainly important. If you are renting and are ready to become a homeowner, call one of our Duffey Realty REALTORs® today. Our agents are ready to help you find just the right house to make your next home.