Virginia Beach home owners can get an income tax deduction on the mortgage interest they pay. But there are other tax deductions you can take on your principal residence or second home, such as property taxes, and in some cases, for Private Mortgage Insurance. Read 2008 guideline from Turbo Tax:

You can deduct:

Your property taxes. And if you bought the home in 2008, you may be able to deduct more than you think. Don’t forget to include real estate taxes you reimbursed the seller for – taxes the seller had already paid for the time you actually owned the place after your purchase. That amount will be shown on the settlement sheet.

Property taxes for taxpayers who don’t itemize. New for tax year 2008, if you do not itemize deductions for 2008, you can increase your standard deduction by up to $500 of real estate taxes paid in 2008 if you file as a single person, or by up to $1,000 of property taxes paid if you file jointly.

The mortgage interest on your primary residence, as well as any secondary residence you own. (There are limits, but relatively few taxpayers are affected.)

The interest on up to $100,000 borrowed on a home-equity loan or home-equity line of credit, regardless of the reason for the loan.

Points that you paid when you purchased the house (or those that you convinced the seller to pay for you).

The premiums paid for Private Mortgage Insurance (PMI) in 2008, but only for policies issued after 2006. (The right to this deduction disappears as Adjusted Gross Income rises from $100,000 to $110,000 on a joint return, and from $50,000 to $55,000 on a single return.)

Home improvements required for medical care.

How much can I save? 

The actual amount of money you save on your annual income tax bill depends on a variety of factors:

• Your filing status (single, head of household, married filing jointly, married filing separately)
• Your standard deduction amount
• Your other itemized deductions
• Your taxable income

Your home-related deductions, plus your other itemized deductions must add up to more than the standard deduction (increased by the amount of property taxes noted earlier that are allowed to non-itemizers), or they won’t save you any money. 

What can’t I deduct? 

You can’t deduct the following payments for your primary residence:

Dues to a homeowners association

Insurance on your home

Appraisal fees for your home

The cost of improvements to your home. (But keep those receipts. They may help you reduce your taxes when you sell your home.)

Learn more about Virginia Beach home ownership by visiting ButlerTeamHomes.com.

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