Tax Tips for Owners of San Clemente Real Estate

Yes, it’s tax season again, and given the state of the economy, saving every penny is important.  One of the major advantages of owning San Clemente real estate becomes readily apparent at this time of year, and that is, of course, tax deductions.  As a homeowner, you can usually deduct 100% of your mortgage interest, insurance, and property taxes –and write off many of your closing costs. 

In order to reap these benefits, you will have to itemize your deductions on your return, but that is time well spent in view of your savings. And better yet, in addition to deductions, there are also tax credits available to you as an owner of San Clemente real estate.  Remember, the tax credit actually reduces the amount of taxes you will pay, whereas a deduction reduces the amount of your taxable income. 

DEDUCTIONS:

• Mortgage interest --includes late payment charges and prepayment penalties.
• Property taxes
• Equity loan interest
• Closing costs for new or refinanced loans--origination fees and discount points.
• Required private mortgage insurance taken out after 2006.  This is the last year you will be able to take this deduction.       
• Moving expenses--provided that your new job is at least 50 miles farther from your old San Clemente real estate and that  your company has not reimbursed you for these expenses. You can also deduct the expenses of traveling from your old house, including lodging expenses. Visit the IRS website and use form 3903 for these deductions.
• Home office use--according to the SBA, the average home office deduction is $3686, so it is to your advantage to explore this area as you prepare your return.  Click here for IRS rules relating to home office deductions.
• Home improvements on your San Clemente real estate done for medical reasons--(attested to in writing by a qualified doctor).  You are allowed to deduct any amount over 7.5% of your adjusted gross income. See IRS Publication 502 for complete information.

CREDITS:

• Energy efficiency—if you purchased an energy-efficient product or renewable energy system for your San Clemente real estate, you may be eligible for a federal tax credit.

**Note for Distressed Homeowners:  The Cancellation of Debt Income associated with loan                      modifications, short sales, and foreclosures will be waived by the IRS through 2012.