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Don't Miss These Home Tax Deductions

By: From mortgage interest to property tax deductions, here are the tax tips you need to get a jump on your returns.

Owning a home can pay off at tax time. Take advantage of these home ownership-related tax deductions and strategies to lower your tax bill:
Mortgage Interest Deduction One of the neatest deductions itemizing homeowners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can be a house, trailer, or boat, as long as you can sleep in it, cook in it, and it has a toilet. Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home. If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit. If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan. Prepaid Interest Deduction Prepaid interest (or points) you paid when you took out your mortgage is generally 100% deductible in the year you paid it along with other mortgage interest. If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year. But if you refinance to get a better rate or shorten the length of your mortgage, or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the life of your mortgage. Say you refi into a 10-year mortgage and pay $3,000 in points. You can deduct $300 per year for 10 years. So what happens if you refi again down the road? Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the life of the loan. Home mortgage interest and points are reported on Schedule A of IRS Form 1040. Your lender will send you a Form 1098 that lists the points you paid. If not, you should be able to find the amount listed on the HUD-1 settlement sheet you got when you closed the purchase of your home or your refinance closing. Property Tax Deduction You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement. If you bought a house this year, check your HUD-1 settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too. PMI and FHA Mortgage Insurance Premiums You can deduct the cost of private mortgage insurance (PMI) as mortgage interest on Schedule A if you itemize your return. The change only applies to loans taken out in 2007 or later. What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately). If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you can’t claim the deduction (10% x 10 = 100%). Besides private mortgage insurance, there’s government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing, and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies. Vacation Home Tax DeductionsThe rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.
  • If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you deduct mortgage interest and real estate taxes on Schedule A.
  • Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Your expenses are deducted on Schedule E.
  • Rent your home for part of the year and use it yourself for more than the greater of 14 days or 10% of the days you rent it and you have to keep track of income, expenses, and allocate them based on how often you used and how often you rented the house.
Homebuyer Tax Credit This isn’t a deduction, but it’s important to keep track of if you claimed it in 2008. There were federal first-time homebuyer tax credits in 2008, 2009, and 2010. If you claimed the homebuyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest. The IRS has a tool you can use to help figure out what you owe each year until it’s paid off. Or if the home stops being your main home, you may need to add the remaining unpaid credit amount to your income tax on your next tax return. Generally, you don’t have to pay back the credit if you bought your home in 2009, 2010, or early 2011. The exception: You have to repay the full credit amount if you sold your house or stopped using it as primary residence within 36 months of the purchase date. Then you must repay it with your tax return for the year the home stopped being your principal residence. The repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who got sent on extended duty at least 50 miles from their principal residence. Energy-Efficiency Upgrades The Nonbusiness Energy Tax Credit lets you claim a credit for installing energy-efficient home systems. Tax credits are especially valuable because they let you offset what you owe the IRS dollar for dollar, in this case, for up to 10% of the amount you spent on certain upgrades. The credit carries a lifetime cap of $500 (less for some products), so if you’ve used it in years past, you’ll have to subtract prior tax credits from that $500 limit. Lucky for you, there’s no cap on how much you’ll save on utility bills thanks to your energy-efficiency upgrades. Among the upgrades that might qualify for the credit: File IRS Form 5695 with your return. Related: A Homeowner’s Guide to Taxes This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction. Visit Houselogic.com for more articles like this.  Reprinted from Houselogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®

Do You Know How to Boost Your Home Value?

HR.Donna_3144CroppedConsumer Reports, March 2016, published an article on “8 Ways to Boost Your Home’s Value”, based on their survey of 1,573 millennials.  Millennials & downsizing baby boomers are the next wave of buyers.  Sellers should take note of what they are looking for in a home:

  1. A modern kitchen topped the list. Consider adding new stainless steel appliances, quartz countertops, updating cabinets and hardware. Potential bump in sale price 3-7%
  2. Open floor plan w/flexible living space. Consider finishing the basement, carving out space for an office, creating an in-law apartment. Potential bump: 4-6%
  3. Energy efficiency. Consider energy star rated windows, LED lights, efficient water heaters. Potential bump: 1-3%
  4. Stress-free living. Consider updating aging systems, new roof, adding hardwood floors. Potential bump: 3-5%
  5. Have a home for “the ages”.  First floor master, walk-in shower, comfort height toilets. Potential bump: 1-2%
  6. Low maintenance outdoor spaces. Avoid overly lush landscaping. Potential bump: 3-5%.

Contact me if you’d like a copy of the full article so you can make informed decisions on your next home improvement projects.  Donna Forest 603-526-4116, Donna@donnaforest.com, www.DonnaForest.com

“Word of Mouth” is the best advertisement, and we love it when you refer your friends and family to Coldwell Banker Milestone Real Estate.

Looking for a Condo Near Town?

This Lyon Brook second floor unit is on Parkside Road just minutes to New London shopping.  Well-maintained, 2 bedrooms, 2 baths, exterior garage and interior basement storage.  Monthly fee includes heat, basic cable, hot water, plowing, sewer, landscaping, trash removal,  and local transportation.  Sit out on the new balcony and enjoy the fresh air!  Offered at $155,000.  For more photos and information, visit http://tour.circlepix.com/home/E2CMQT

MoonstoneSummerEmily Campbell, Listing Agent, 603-526-4116

“Word of Mouth” is the best advertisement, and we love it when you refer your friends and family to Coldwell Banker Milestone Real Estate.

Six Tips for House Hunting

HR.Donna_3144House hunting is an emotional experience. There is no “perfect” house and you need to keep in mind it’s a decision-making process that involves trade-offs between each property. Here are some key concepts to remember:

  1. Get pre-qualified before going out to look at homes.       This way you won’t fall in love with a house you can’t afford.
  2. Think about not only how the house will meet your present needs but how it will work for you in the future as well.
  3. Consider all the pluses and minuses of the location and how it fits into your lifestyle, including travel time to work, schools, etc.
  4. Set priorities. Put more emphasis on your needs vs. wants.
  5. Ignore bad décor. Be prepared to look at potential; cosmetics are easily changed.
  6. Don’t forget resale. Choose a home that not only appeals to you but also is likely to appeal to others down the road.

It is important to work with a good REALTOR® who knows the neighborhoods and local information. If you are planning to buy a home, contact me and put my 21 years of experience to work for you as your Buyer’s Agent.  Donna Forest 603-526-4116; Donna@DonnaForest.com; www.DonnaForest.com

Known for service, trusted for results – Coldwell Banker Milestone Real Estate.

Looking for Office Space?

We have just the place to grow your business!  Bright and inviting corner unit in The Gallery building in New London.  Three separate office spaces as well as a waiting area and half bath.  Monthly assessment of $347 includes heat, water, sewer, maintenance and plowing.  Great location, plenty of parking.  Offered at $84,900.  Also available for rent at $900/month plus utilities.

BarselleGalleryEmily Campbell, Listing Agent, 603-526-4116

“Word of Mouth” is the best advertisement, and we love it when you refer your friends and family to Coldwell Banker Milestone Real Estate.

Steady as She Goes

HR.Donna_3144CroppedThe housing market has settled into a steady groove with home prices expected to follow more normal rates consistent with a balanced market.  Home prices rose 4% nationally in 2015.  Kiplinger forecasts prices to rise 3% in 2016 while CoreLogic Home Price Index predicts a 4-5% increase. What type of buyer will drive the market this year? According to the National Association of REALTORS®, there are 3 main sectors of buyers expected to stimulate the housing sector.

  • Millennials, born about 30 yrs. ago, are starting to realize their financial goals and thus become first-time home buyers.
  • Older baby boomers nearing retirement age will be seeking to downsize and lower their cost of living.
  • Formerly distressed homeowners are expected to actively participate in the housing market as well.

Every market is local and there are certain parts of the country with “hotter” markets than others. Whether buying or selling, contact me if you’d like to know how the local market impacts you.  Donna@DonnaForest.com, 603-526-4116, www.DonnaForest.com.

Real estate markets are local, and we have the real scoop on ours. Coldwell Banker Milestone Real Estate

Stunning New Home!

This beautiful home is currently under construction and overlooks a private pond in New London.  There's plenty of room for entertaining in the large rooms.  First floor master suite plus optional second floor master suite.  4 bedrooms and 4 baths, quality finishes.  8.95 acres with frontage on Messer Pond.  A great location, not far from town.  Offered at $795,000.  Visit http://tour.circlepix.com/home/65CRN5 for more photos and details.  Agent interest.

Snow lighter resizedJane Snow, Listing Agent, 603-526-4116

Teamwork from the Team that works – Coldwell Banker Milestone Real Estate.

Start Prepping Now!

HR.Donna_3144If you are thinking of selling your house this spring, now would be a good time to start preparing.  Most homes could benefit from sprucing up and de-cluttering.  Putting a house up for sale without prep usually means a lower price and longer time on the market.  Here are a few tips so you can be ready for the spring market.

  1.   De-clutter.  Remove/rearrange furniture so rooms appear larger.
  2.   De-personalize.  Pack up collections, clear knick-knacks, remove personal photos, etc.
  3.   Paint.  Freshen up rooms; use nature and spa-inspired colors.
  4.   Modernize.  Update cabinet hardware, replace lighting, paint dark cabinets.
  5.   Make repairs.  Both large and small.
  6.   Deep clean.  Make every surface shine from baseboards to ceiling fans.

Looking for more advice on how to entice buyers?  Contact me to arrange for a personalized list on how to enhance your house before putting it on the market.  603-526-4116, Donna@DonnaForest.com, www.DonnaForest.com

Teamwork from the Team that works – Coldwell Banker Milestone Real Estate.

Winter Carnival is Coming!

SnowflakeCome join the fun with Winter Carnival 2016, January 27th-30th, New London, NH.  Click here for the schedule of activities:  WinterCarnivalSched_2016 Thanks to all the volunteers, businesses and participants who make this such a success each year.

Known for service, trusted for results – Coldwell Banker Milestone Real Estate.

NH Home Sales, Prices Jump Again

New Hampshire residential home sales and prices showed increases again in November, according to data released recently by the New Hampshire Association of Realtors (NHAR). The 1,137 closed sales in the month marked a 10.5 percent increase from November 2014, while the median price of those sales was $233,975, a 3 percent hike from the median price of November 2014. It was the ninth consecutive month in which both the number of residential sales and median price were ahead of the same month prior year. And sales volume, meaning the total dollars exchanged in those residential transactions, was 16 percent ahead of last November. “We’ve had a very consistent message for the last couple of years, and that’s been a steadily improving housing market, reflective of a steadily improving economy,” said NHAR President Maxine Goodhue, an 18-year veteran of the real estate industry and a broker associate with Four Seasons Sotheby’s International Realty. “That’s no different this month.” Year to date, the numbers are similarly on the rise. Through the end of November, 14,493 residential homes have been sold (an 11.3 percent increase from last year) in 2015, at a median price of $240,000 (5.3 percent increase), and a sales volume increase of 16 percent. And although the total supply of the state’s available residential housing inventory was down by 11 percent at the end of November, compared to 2014, the new listings for the month increased by 9 percent, meaning prospective sellers seem to be optimistic about their market conditions. Another indicator of inventory levels – months’ supply – dropped to 7.7 months, the lowest November number in more than 10 years. Months’ supply represents the number of months it would take to sell off the current inventory at the average pace of sales for the previous year. And while the trend indicates momentum toward leverage on the sellers’ side, 7.7 months is considered a balanced market. More than nine months’ supply is traditionally thought of as a buyers’ market, and anything less than that a sellers’ market. “This is a healthy market for both buyers and sellers,” Goodhue said. The condominium market is also experiencing increases in 2015, with closed sales up by better than 8 percent in September and nearly 15 percent year to date. The median price on those sales was up by 6 percent in November and 2.4 percent year to date. Locally, nine of 10 New Hampshire counties saw residential unit sales increases in November 2015 compared to 2014, and all 10 counties are ahead of 2014 year to date. Seven of 10 saw an increased median sales price in November, while year to date all but Merrimack County (down 1.4 percent) have seen a median price increase. See Market Report November 2015 market dataSource:  Press Release, 12/17/15, Dave Cummings, NHAR Director of Communications

Real estate markets are local, and we have the real scoop on ours. Coldwell Banker Milestone Real Estate

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