Filing Your 2022 Returns, Do You Have Everything? Gathering information to file your taxes can be daunting. However, you want to make sure you find everything, so you don’t miss a deduction or have to run and find it later.
Make sure you’re deducting the right year of property taxes for 2021.
Pay for the year of property tax is paid even if it’s labeled a different year. The IRS only cares about what you paid during 2022.
There’s also a $10,000 cap on your combined amounts of property taxes and state/local deductible sales tax. (Realtor.com)
But the sunny side of this is if you’re a landlord or own a vacation home, you can take deductions for all the properties you own, plus your state income tax. (Realtor.com)
Your Escrow amount does not equal the Actual Taxes paid.
Lenders take out enough money to their estimated amount for taxes plus a little more or a little less. Usually your property tax bill may be different from the amount escrowed by your lender. Your lender will send you a Form 1098 showing exactly how much they paid from your escrow account for your property taxes. Use that form for your taxes.
Not tracking Home-Related Expenses.
Keep the records you use for your tax deductions in either paper or electronic form. If you have sold or purchased property, you’ll want to keep the following records from the sale.
| Document | How Long to Keep It by HouseLogic |
| Home sale closing documents, including closing statement | As long as you own the property + 3 years |
| Deed to the house | As long as you own the property |
| Builder’s warranty or service contract for new home | Until the warranty period ends |
| Community/condo association covenants, codes, restrictions (CC&Rs) | As long as you own the property |
| Receipts for capital improvements | As long as you own the property + 3 years |
| Mortgage payoff statements (certificate of satisfaction or lien release) | Forever, just in case a lender says, “Hey, you still owe us money.” |
From Houselogic.com
Claiming too much of your Mortgage Interest Deduction.
According to Houselogic, “If you’re eligible to itemize, the MID loan limit is $750,000. Before Dec. 16, 2017, the limit was $1 million. Make sure your loan is grandfathered before claiming the old limit.
Interest paid on home equity loans and second mortgages is deductible, but only if the proceeds of such loans were used to substantially improve the home that secures the loan. You can’t deduct interest on home equity loans that were used for things like student loans or cars.
Be sure not to include any interest you paid on your home equity debt, it’s been eliminated a while back – UNLESS you spend the money on home improvements.
And the amount of all mortgage loans (first, second, home equity, and loans for a second home) can’t exceed the $750,000 limit.”
Article highlights from Houselogic and REALTOR.com
This post is to provide general information but shouldn’t be relied upon as tax or legal advice applicable to any transactions or circumstances. Please consult your tax professional or attorney for such advice.