As you prepare your tax returns this year, consider each and every home tax deduction and credit you are (or are not) entitled to by owning a
Coastal Carolina home. By overlooking these common home-related tax mistakes, you may end up paying more out of pocket than necessary. Below are six common tax mistakes for you to watch out for and avoid.
Property Taxes— Deducting the Wrong Year
You only take a tax deduction for property taxes in the year that you (or the holder of your escrow account) actually paid them. Some tax authorities work a year behind— meaning you are not billed for 2013 property taxes until 2014.
Enter the amount you
actually paid in 2013, no matter what date is listed on the tax bill. In the past, homeowners mix up payments for different years and end up claiming the wrong amount.
Escrow Amount— Confusing for Actual Taxes Paid
If your lender escrows funds to pay your property taxes, don't just deduct the amount escrowed. The amount you pay into escrow each month to cover your
North Carolina Crystal Coast property taxes is most likely a bit more or less than your total property tax bill. The lender will adjust the amount every so often to realign them. Deduct only what the actual amount is. For instance, if your tax bill is $1,200, but your lender collected $1,100 or $1,300 in escrow, deduct
only the $1,200. Don't just add up the twelve months of payments.
Refinancing— Deducting Points Paid
This deduction is complicated and often doesn't amount to much of a deduction. It also has to be recaptured if you turn a profit when you sell your Coastal Carolina home. Be sure to
only claim it if it's worth those drawbacks.
Home-related Expenses— Failing to Track
The truth is, many homeowners forget to track their home office, home maintenance, and repair expenses. Remember to file documents as you go and as you purchase them. This way, you won't be scrambling when the IRS comes knocking at your door.
Mortgage Interest Tax Deduction— Claiming Too Much
You can only deduct mortgage interest of up to $1 million of mortgage debt. If you have more than that, only deduct the mortgage interest up to the first $1 million.
Energy Tax Credits— Filing Incorrectly
If you installed improvements like energy-efficient windows and doors in 2012, or will in 2013, you may be eligible to take a 10% tax credit up to $500. But if you claimed the credit in recent years, you're done. For this, fill out Form 5695.
By paying close attention to these common tax mistakes made by the owners of
Coastal Carolina homes, your tax return should go as smoothly as possible.
