Tax Preparation Checklist for a Homeowner

Your home can be a tax shelter.

Homeowners are eligible for a number of tax breaks not available to renters. Understanding those tax breaks and incorporating them into your tax planning can save you thousands of dollars a year. Taking the time to gather your receipts and prepare your information properly is the best way to achieve those tax savings.

Schedule A

You list your home mortgage interest, real estate taxes and other home-related expenses when you itemize your deductions, so you should download a copy of Internal Revenue Service (IRS) Schedule A before you start working on your taxes. Schedule A is where you list your itemized deductions, including not only expenses related to your home but things like charitable donations.

Interest Statement

Your mortgage lender should have provided you with an amortization schedule that listed the amount of principal and interest for every payment you make. Your lender should also provide an annual report showing exactly how much you paid in interest on your mortgage during the previous year. If you do not receive this statement, contact your lender to request it. You need to know how much interest you paid in order to take the home mortgage deduction.

Real Estate Tax Receipts

If you own a home, chances are you pay real estate taxes. Gather your real estate tax receipts before you start filing your taxes, then add up all the payments you made to get the total you paid. If you pay through an escrow account, your lender will include the amount paid on a statement. Include that total when you file your taxes so you get credit for all your real estate taxes.

Home Improvement Costs

While you cannot write off home improvement costs when you incur them, it is still important to include them in your tax planning. The improvements you make to your home can increase your cost basis, which can reduce any capital gains tax liability when you sell your home, Keep receipts for things like new countertops, replacement shingles and shed construction with your tax records.

References

• IRS: Home Mortgage Interest Deduction
• TurboTax: Tax Breaks and Home Ownership

Resources

• IRS: Schedule A (PDF)