Posts Tagged ‘health’

Common Homeowner Tax Deductions

March 23, 2010

Owning a home is the American dream and a source of tremendous pride for you and your family.  Another advantage to buying real estate is the ability to shelter a portion of your income from federal taxes.  Following are some of the more common deductions available to home owners.  Along with some basic information on each are links (bold type) to the IRS website where detailed information can be found.    

As always, consult with the IRS or your tax professional for current guidelines and qualifying criteria on tax related matters.  For information about a home loan to meet your needs and goals, contact one of our licensed Loan Officers.

Mortgage Credit Certificate Program  –  The MCC program is a Federal tax credit of up to 20% of the interest you pay on your home loan over a calendar year, and is available in select states.  While this does not reduce your monthly payment, it is a dollar for dollar reduction in the amount of your Federal income tax liability.  In effect, you are lowering your home loan interest rate by a full percent.  The MCC program will remain in effect for as long as your home remains your primary residence and the original home loan remains in place.  Awareness Home Funding is a lender that does help our clients with this program.    

Home Buyer’s Tax Credit  –  Home buyers may be eligible for a tax credit of 10% of the purchase price of their newly acquired home.  First-time buyers may be able to claim up to $8,000; existing home owners may qualify for up to $6,500.  We have provided some information on this program in two separate articles (No Time Like the Present and The Other Side of the Coin).

Mortgage interest  –  Interest, in general, is defined as an amount paid for the use of borrowed money.  In order to deduct interest on your home mortgage loan, you must be legally liable for the debt that is secured by your main or secondary home.  This amount is generally reported to you on Form 1098 by the lender you have made payments to.  This form should also detail any prepaid interest you have paid.   

Points or Discount Points  –  Points refer to specific charges you may pay in order to obtain a lower interest rate for your home mortgage loan.  Fees associated with preparation costs, appraisals, inspections or notaries do not typically qualify as points.   

Mortgage insurance premiums  –  These expenses are paid to allow a buyer to pay a lower down payment than the 20-25% requirement of a Conventional loan and also protect the lender in the unfortunate event of default on the loan.  Qualifying mortgage insurance may be provided by:

  • The Federal Housing Administration in both an upfront and annual fee.
  • The Department of Veterans Affairs as a one time funding fee
  • The Rural Housing Service as a one time guarantee fee

The amount which can be deducted is reported on Form 1098 by the lender you have made payments to.   

Real estate taxes  –  These are taxes charged on real property based on taxable value.  The IRS highlights what specific taxes associated with your property are deductible.  

Home offices  –  If you use a portion of your home for business purposes, you may be able to deduct certain expenses.  Typical items that may be deductible include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, maintenance and/or repairs.   

Moving expenses  –  If you moved due to a change in employer or occupation, you may be able to deduct your moving expenses.  The two qualifiers used to determine whether this deduction applies to your situation are distance and duration.   

Energy improvements  –  Occasionally, government supported programs allow specific home improvements to qualify for a federal tax credit or a partial rebate of the sales price to the homeowner.  These items are usually of an energy efficient nature for products such as appliances, windows or insulation for the home.   

Health related improvements  –  Home improvements made as a result of a health issue are expenses that may be deducted for the tax year they were paid.  The IRS considers these as Capital expenses and explains what may be included and how to claim these items. 

As always, consult with the IRS or your tax professional for all the current guidelines and qualifying criteria in order to take advantage of these tax deductions.  For information about a home loan to meet your needs and goals, contact one of our licensed Loan Officers.

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Physical and Financial Fitness – Who is Responsible?

February 9, 2010

We recently found a blog post by Philosophy Professor Nina Rosenstand from San Diego Mesa College where she raised the question of whether or not staying slim was a moral responsibility.  She implicitly asked who should ultimately be responsible for our own physical health, and whether or not an employer could assume this task.  While the focus of her article was on physical fitness, it got us thinking.  Who is ultimately responsible for your financial fitness? 

In the same way our weight is used as one indicator of physical health, a person’s credit score is used to portray a person’s financial fitness.  Your credit score measures your fiscal responsibility from the past up to the present.  Like your weight, this too is only one indicator of your overall financial health.   A credit score doesn’t account for factors outside of your control like a company closing leaving you without a job and therefore no income, that potentially leads to foreclosure.  Your credit score doesn’t explain a divorce that suddenly cuts your income in half. 

However, do the occurrences of life totally void us of all responsibility when it comes to our finances?  Are “we the people” to some degree responsible for this messed up economy due to our collective lack of financial accountability?  Can we be allowed to wash our hands of financial integrity just because “life” happens?  Shouldn’t we expect the unexpected to happen?   

Being financially sound (i.e.: strong credit scores, emergency savings, balanced budgets, living within our means) has many benefits such as lower health and auto insurance rates, better interest rates, and even job offers.  Should we push the blame of financial blunders onto someone else?  At what point do we say this is my life, my finances, my responsibility?  Along with teaching our children about living healthy, we need to also teach them financial responsibility.  Perhaps we might find that sound financial health can lead to better physical health.

We are not so ignorant (nor arrogant) to think that hiccups are not going to occur along the path of life.  They do.  And if you have not experienced one, odds are you will at some point.  As a company we are bound by industry and legal regulations to enforce set standards of acceptable financial health.  However, we also want to help our clients improve and maintain optimal financial health.  We cannot fix a client’s struggling credit any more than we can do sit-ups for you, but like a personal trainer we can offer guidance, suggestions and helpful ideas. 

What are your thoughts?