Whether you’re buying a home in the Garland, Rowlett or Rockwall areas, there are a few, sometimes overlooked tax breaks for homeowners that could help you save some money when filing your income taxes.
A tax code of 73,954 pages means that sometimes people miss the important stuff, the items that could save them money. A few of these items are tax breaks related to real estate you own. I’ve listed a few below. Be sure to bring them up to your tax preparer for professional advice to see which of these may be of benefit to you.
1. Mortgage Interest
The home mortgage interest tax break is a major motivation behind many people purchasing a home. This is an obvious deduction, but even so, it is sometimes overlooked by homeowners. In most cases, you would need to itemize your taxes to take advantage of this deduction. Itemizing your tax deductions can be a little extra work, but it can be well worth the effort if you can save some money. Following are a few tools that may be of value to you regarding your home mortgage interest tax deductions:
- Mortgage Tax Deduction Calculator
- Deducting Mortgage Interest FAQs
- IRS: Home Mortgage Interest
- The Tax Benefits of Home Ownership
- Six Important Tax Tips for Homeowners
2. Property Taxes
You can deduct your local property taxes as long as they are based on the assessed value of your property. If you have an escrow account from which your property taxes are paid, you can claim this deduction once taxes are paid out of the escrow account. Following are a few tools that may assist you:
- Dallas County Central Appraisal District – This site has plenty of information from property tax exemption information, change of address, property tax appeal form, questions and answers, and contact information.
- Collin Central Appraisal District – This site is easy to navigate and provides information from interactive maps, plat maps, tax forms, reports, key annual cycles, appraised values, exemptions and rates, contact information, and a helpful FAQ section.
- Rockwall Central Appraisal District – This site has plenty of information from property tax exemption information, change of address, property tax appeal form, questions and answers, and contact information.
- Kaufman County Appraisal District – This site contains a lot of information such as tax forms, how to appeal property values, change of address, contact information, and questions and answers area.
3. CODI Income
The Cancellation of Debt Income, or CODI, is the route through which defaulted mortgage debt from foreclosure, short sale, or settlement, is forgiven through a partial payment, which is actually charged as income. However, thanks to a 2007 act named The Mortgage Forgiveness Debt Relief Act and Debt Cancellation, the IRS temporarily exempted CODI from incurring tax income liability for many home buyers in order to avoid penalizing them for these settlements and resolutions to upside-down home mortgages.
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation expired on December 31, 2014, and while it might be extended another year as it was last year, there’s opportunity to claim this if you are one of the many home owners to whom this applies for 2014. If this is you, there is a chance that you might be eligible to claim this when you file your 2014 return by the April deadline.
4. Going Green
The wave of green initiatives across multiple industries over the last few years makes this an obvious selection. If you added some energy efficient items to your home last year, such as solar panels, dual-paned windows, added insulation, high efficiency heating or air, or low-flow plumbing appliances, these can be eligible for state, county, and perhaps city tax credits or tax breaks. If you made any of these improvements over the last year, it’s time to pull out your receipts and determine if you might be eligible for green tax breaks.
Following are a few resources that may assist you:
- Database of State Incentives for Renewables & Efficiency – Texas
- Energy Efficiency Initiative – Garland Power & Light
- Texas Is Hot – Energy Efficiency Rebates and Incentives
- Solar Estimate – a resource for energy incentives, solar rebates and tax credits
- Lyons A/C & Heating – Johnny Lyons is the utmost professional. He can provide you with a personal assessment on your home A/C and heating, as well as advice for energy efficiency rebates.
- JP Novak of 512 Solar is a great resource for information and strategy around solar energy as well as available rebates and tax credits.
With mortgage rates near historic lows and Garland, Rowlett and Rockwall home inventory beginning to show some signs of improving, now is the time to consider that home purchase.