Tax Tricks for Homeowners

Tax Tips & Tricks for Homeowners

Although gaining the status of homeowner can be a monumental moment in your life, the responsibility and excitement can often overshadow one of the most appealing aspects of owning your home: tax deductions and savings! In fact, every bit of your property taxes and mortgage interest can be itemized on your taxes and result in impressive savings.

Savings that accompany homeowner-ship can pave the way for allowing you to afford a home they you may not otherwise be able to even consider. In addition to property taxes stemming from mortgage interest and property taxes, you can also deduct some of your closing costs. Profits that are gained after a home is sold are tax deductible, highlighting yet another benefit you can experience through the purchase of a home. Saving money and taking advantage of being a homeowner is easy with these simple tax tips and tricks:

You Got to Itemize

While you may ultimately discover that accepting the standard deduction provides you with the greatest tax benefit, it is worth the effort and time to insure that itemizing does not provide greater savings. Itemizing can give you a way to compare what you could receive with the standard deduction you may have always taken when filing taxes in the past. Whether you are using tax software or completing your taxes by hand, take the time to itemize and insure you will receive the highest benefits possible accompanying your status as a homeowner.

Home Office Deductions

It can be an obvious fact that deducting a home office on your taxes can provide savings, but it is important to weigh the benefit of annual home office deductions with capital gains taxes. Capital gains taxes are only exempt for residences, making the deduction of a home office a problem if you hope to receive such exemptions if you sell your home in the future. Seeking the help of a tax professional can be a great way you can discover whether the deductions that come with a home office are worth taking in contrast with capital gains exemptions.

Foreclosures, Short Sales and Loan Modifications

One of the risks of buying a home is the high levels of foreclosures and other struggles homeowners can run into. But while losing one’s home is a risk we take when purchasing property, the current housing outlook gives us some protection if you do ever have to endure such hardships. Although a mortgage may be erased if foreclosures, short sales or modifications occur, the mortgage amount will still be taxed as a Cancellation of Debt Income, according to the IRS. Losing a home to foreclosure can be trying enough, but after 2012, exemption from paying taxes on lost property or modified loans will come to an end. The Mortgage Debt Forgiveness Relief Act is only good until 2012, making it much less risky for you to purchase a home before the act expires.

Is Refinancing for You?

Refinancing has been a hot topic as of late. In fact, you may have friends and family rushing to refinance their home in order to take advantage of historically low interest rates. While refinancing can be a good option, it can result in some lost tax savings that could have outweighed the interest rate savings you expected. A lower interest rate that results from refinancing your home can actually result in lower tax savings. The bottom line: paying lower interest as a result of refinancing your home will result in less tax savings.

Closing Costs

With the excitement of home ownership and purchasing property, it can be easy for you to overlook the closing costs that can be deducted from taxes, just as mortgage interest and property taxes can. Whether you paid the closing costs for the home you bought or plan on purchasing or the seller paid them, closing costs are tax deductible. How much you paid, or the seller paid, for closing, can be found on your HUD-1 form or by calling your realtor.

Anastacio Mindiola is an accomplished attorney and business owner. His company helps home and business owners protest property taxes in Houston and the surrounding counties. For more information on how you can lower your property taxes visit

401k Investors Want Help With Asset Allocation Strategies.

This article will focus on 401k plan participants expressed desire for help with asset allocation strategies; but, with a twist.

The author just finished reading a white paper prepared by ING Retirement Research Institute released on 3/31/2011. The title of the report is “Shedding Light on Retirement.” 2,600 401k plan participants were surveyed by the Boston Consulting Group on behalf of ING. One commentator took the report and proclaimed that the report indicated plan participants wanted help from their employers with asset allocation strategies. In fact 89% of the respondents said this was the help they wanted.

This is why I always prefer to read source material. Yes, the plan participants did say they wanted this help. However, in looking at the report, there were notable paradoxes in the responses. Specifically, 79% said they want control over how they invest; yet, over half stated they want more guidance, a roadmap, from their employer. In addition, 76% stated they want more investment choices; however, over half said they do not know how to achieve their retirement goals.

ING’s response to this survey was to create a website to help participants with education and offer personal contact, if they wish.

I suppose that is one solution. Perhaps another solution would be for employers to include professional 401k advisors for face-to-face, employee consultations. Survey participants seemed to suggest this is what they wanted; but, will such an offering by employers expose them to the Fiduciary Liability that they were so anxious to avoid when they terminated defined benefit plans?

Perhaps the responsibility is on the employee to realize they are truly on their own to find finance professional for themselves. Asset allocation strategies are not the only thing that 401k plan participants desire.  Many said they need help determining how much money they will need to take them through their retirement years and they also wanted help with an annual checkup to see if they are on track. Perhaps 401k advisors are the answer. The real question is how to deliver the service.