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Homeowners, don't miss out on tax breaks

Here are five tax deductions that can entitle you to hold on to more of your money.

February 26, 2012|By Scott J. Wilson, Los Angeles Times
  • Claiming such items as mortgage interest or seeking a tax credit for energy-efficient upgrades at the home can lower your tax bill. Above, houses in Sun Valley.
Claiming such items as mortgage interest or seeking a tax credit for energy-efficient… (Katie Falkenberg, For The…)

If you own a home, it pays to know the tax breaks that could be available to you. Here are five deductions spotlighted by personal finance writer David Bakke for the Zillow real estate blog. For more specific information, see your tax preparer or call the IRS help line at (800) 829-1040.

Mortgage interest. You're generally entitled to reduce your taxable income by the amount of mortgage interest you pay, as long as you itemize deductions on your tax return. Your lender should have sent you a 1098 form in January showing exactly how much interest was paid.

Private mortgage insurance. If you're paying PMI, the amount is likely to be fully deductible as long as your adjusted gross income is $100,000 or less ($50,000 for married taxpayers filing separately). Borrowers with incomes above $100,000 may qualify for a partial deduction.

Energy-efficient home improvements. If you installed windows, doors or skylights that met the requirements of the federal Energy Star program in 2011, you could get a tax credit equal to 10% of the product's costs. Hold on to receipts and documentation in case the IRS asks.

Points. The charges you paid in points to get a mortgage are generally deductible if it was a first mortgage on the property. In the case of a refinance of a loan, all or some of the point charges might be deductible, but it gets complicated — check with your tax preparer or the IRS.

Property taxes. The amount you pay in property taxes is deductible as long as it is based on the assessed value of your property (which is usually the case). If your mortgage company collects money from you for the taxes, the amount actually paid should be on the 1098 form you receive.

scott.wilson@latimes.com

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