It’s that time of year when we are all frantically trying to gather our year-end statements in order to secure our spot in the accountant’s ever-lengthening queue of files to work through prior to the April 15th deadline. Here are some real estate tax tips to keep in mind as you file.
One important document to remember to submit is your HUD-1 or Settlement Statement, along with your filing documents. As the seller, you will have completed a 1099-S at closing which the Title Company filed with the IRS on your behalf. It illustrates the purchase price. Be sure to also provide your tax professional with the HUD because it will show the other closing-related costs which may be deductible from your gain.
Home buyers can deduct points paid up front to lower their interest rates and the property taxes that were pro-rated at the time they closed. Did you put less than 20% down and are paying mortgage insurance? Those charges are deductible as well.
Peter Wood, of Park City’s Wood & Wood, Financial, Tax and Business Services, adds “It is important that you retain a copy of the HUD-1. I would suggest keeping it as part of your tax return. If you sold a home in order to purchase a new home, provide your tax professional with a copy of the HUD-1 from the purchase (if available) and the sale of the old home.
Get an expert’s opinion on what is needed and how to best strategize your tax burden, but remember that any good real estate agent will also assist in making sure that your investments in your home are correctly measured during tax time.