Walworth County Real Estate Attorney, Shannon Wynn, wants you to know about some important real estate tax breaks you can claim on your Federal and State income tax returns. With income tax returns due in the next couple weeks, there is no time like the present to make sure you have claimed all your deductions and credits. To take advantage of real estate tax deductions, you will have to itemize your deductions. For most Walworth County residents, itemizing your deductions is always well worth the effort. However, to be sure, compare your itemized deduction amount to the standard deduction amount and always choose the option providing you with the larger deduction.
When itemizing your deductions, refer to this list of homeowner tax breaks. Below we have detailed some of the best Walworth County real estate tax deductions.
1. Mortgage Interest. This is one of the biggest real estate tax breaks for Walworth County homeowners. For most homeowners, especially if you just recently purchased your home, the majority of your mortgage payment is going to interest. All of your mortgage interest is tax deductible. There are only interest deduction limits if you own a multi-million dollar residence. Therefore, as long as your mortgage is less than one million dollars, you can fully deduct every penny of your mortgage interest. Your financial lender should have sent you a statement in the mail indicating the amount of mortgage interest you paid in the previous year.
Some special notes about real estate mortgage tax breaks:
a. If you refinanced or took out a home equity line of credit, you can normally also deduct these amounts as long as the amount is less than $100,000.
b. You can also deduct the mortgage interest on your second home, vacation property, RV, or houseboat, as long as the “second home” has cooking, sleeping, and bathroom facilities.
c. You can rent your second home and still deduct the mortgage interest. However, you must spend time at the second home yourself (14 days, or more than 10% of the total rental days).
2. Mortgage Points. If your credit was not perfect, you may have paid “points”. Paying points means that you paid money to buy down your mortgage interest rate. Pull out your closing documents and look for the mortgage points paid. There are qualification requirements in order to deduct your mortgage points, such as the mortgage must be for your primary residence, paying points is a common practice in your area, and some other rules. Please check with your Walworth County real estate attorney or CPA to see if your mortgage points are tax deductible.
Some special notes about real estate mortgage points:
a. If you have a refinanced loan, a second home mortgage, or a home equity loan, you can deduct points, but the points usually have to be deducted over the life of the loan. See your Walworth County Real Estate Attorney or CPA for details.
3. Walworth County Real Estate Taxes. Homeowners can deduct their Walworth County real estate taxes. If you escrow, you will find the amount on the statement you received from your financial institution at the end of the year. If you don’t escrow or do not have your end-of-year mortgage statement, you can refer to your Walworth County property tax bill. You can deduct your Walworth County real estate taxes every year for as long as you own your home.
Some special notes about Walworth County real estate taxes:
a. If this is the first year in your home and you moved into your new home mid-year (not January 1st), you will need to pull out your closing documents. The buyer and seller of the real estate property most likely each paid their portion of the year’s real estate taxes. Your portion is fully deductible.
These three Walworth County real estate tax breaks for homeowners carry the largest deductible amounts. This is not a full list of real estate deductions available. Please, consult with the IRS or your Walworth County real estate attorney for a complete list of deductions available to homeowners. Remember, it may take longer to itemize deductions on your tax return, but the benefits are well worth the effort. Always compare your itemized deduction amount to the standard deduction amount in order to get the biggest tax break.
Contact Our Walworth County Real Estate Attorney
If you have questions regarding tax deductions, foreclosures, or any other real estate matter, please feel free to contact our Walworth County Real Estate Attorney. We are more than happy to schedule an appointment with you to discuss your real estate matter. Wynn at Law, LLC conveniently has offices located in Lake Geneva, Delavan, and Salem, Wisconsin. You can reach our Walworth County Real Estate Attorney by phone at 262-725-0175 or by email via our website’s contact page.
*The content and material on this web page is for informational purposes only and does not constitute legal advice.