6 Last-Minute Real Estate Tax Tips for Total Procrastinators

April 15. No other date inspires such paralyzing anxiety. Glaring from the pages of your calendar, it’s an ever-present reminder that Uncle Sam wants—no, needs—you to file your taxes.

Credit: “The Untouchables” (1987), Paramount Pictures

Credit: “The Untouchables” (1987), Paramount Pictures

Well, you don’t have much time left. So get busy! Whether you own or rent, there are real-estate-related tax savings for all to claim—if you file on time:

  1. Home energy tax credit: This credit allows homeowners to take advantage of alternative-energy upgrades. If you decide to install solar panels, geothermal heating systems, or even a fuel cell, you can get a credit for 30% of the cost of the equipment. (You probably knew that when you installed them, right?)
  2. Home office deduction: Both renters and homeowners can take advantage of this one. As a general rule, you must use a part of your home regularly and exclusively for business purposes. If you use the “Simplified Option,” you multiply the square footage of your office (300 is the maximum allowed) by a rate of $5. With this method, the deduction is capped at $1,500. If you use the “Regular Method,” you can deduct certain costs—part of your rent or mortgage interest, taxes, and utilities paid.
  3. Mortgage interest deduction: Homeowners can use this deduction for their primary residence as well as a second home. Both first and second mortgages, as well as a home equity loan, qualify for the deduction.
  4. Tax tips for sellers: Those who sold a home in 2014 can deduct all costs associated with the sale—commissions, closing cost credits, staging costs, fees associated with the sale. And remember, the IRS allows single people to keep $250,000 of profit from their home sale; joint filers get up to $500,000. Any sum above that is subject to capital gains taxes.
  5. Moving expenses: If you relocated for work, you may be able to deduct those expenses. According to the IRS, your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. Surprisingly, the IRS makes this easy to figure out through a handy Q&A format.
  6. Finally, double-check everything. The IRS says filers make these eight common mistakes: wrong or missing Social Security numbers, using the wrong name (did you get married? divorced?), math mistakes (naturally), errors in figuring credits or deductions (are those really errors?), forgetting to sign the form, giving the wrong bank account number (if you want your refund direct deposited, get the routing number right!), and not knowing their electronic filing PIN.

With any luck (or a lot of hard work), you’ll be getting a nice refund. Got any plans for that cash? Tell us in the comments below.

Published by Chrystal Caruthers on realtor.com.

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5 Tax Mistakes New Homeowners Make

iStock

iStock

Few people look forward to tax season, and when you’re a new homeowner, filing can be even more daunting. Suddenly, you have new forms to fill out and more potential for making a mistake.

But taxes aren’t all bad; homeowners get more tax benefits than renters. And if you can avoid these five common mistakes, you’ll survive tax season.

1. Not tracking your home improvement expenses

If you bought a fixer-upper and you’ve put money into improving your home, you should be keeping a detailed record of your expenses.

Some home improvements—like installing energy-efficient features or building an entrance ramp—may qualify for tax deductions. Other home improvements won’t qualify for an immediate tax deduction, but they can help you when you sell your home.

Under the home sale exemption, home improvements increase your basis in your home, which lowers the taxable amount of your sale price. The exemption can save you money, but you’ll need receipts and records to prove you made upgrades in your home.

2. Using the home office deduction incorrectly

The home office deduction is complicated and can get the attention of the Internal Revenue Service, potentially resulting in an audit.

To avoid mistakes, get a tax professional’s help or opt for the new simplified home office deduction. This deduction allows you to skip the complicated aspect of the home office deduction like calculating office space.

3. Filing the wrong year

Many new homeowners mix up the dates. Several taxing authorities are a year behind on taxes. This means, for example, when you file in 2015, you’re actually filing for the 2014 tax year. If you choose the wrong year, you could end up filing the wrong amounts and that may lead to a lower-than-expected refund or even an audit.

4. Deducting your full escrow balance

If you’ve been putting money into escrow throughout the year, be careful with how much you deduct on your taxes. Many homeowners simply list their full escrow balance, but not all of your funds in escrow are used to pay taxes.

Before you file, contact the escrow account manager and find out the exact amount of taxes paid from your escrow, then list that amount.

5. Not itemizing

If you’ve been working one job and renting for years, you’ve likely been able to file your taxes using the simplest form, the 1040EZ. But opting for the simple form once you’re a homeowner could cost you.

Homeowners receive a host of tax deductions and benefits that might lower your tax obligation and increase your refund, but you’ll have to file a long form to get most of those benefits. If you aren’t sure which is the better deal, ask a tax adviser for help.

This article was published by Angela Colley on realtor.com.