Mistakes Homeowners Make On Their Taxes
Every year, homeowners make a number of common mistakes on their taxes. And with all the recent changes, homeowners and investors are even more likely to make a mistake than they were in previous years. Learn more about the deductions available in our latest post, what you are entitled to and what you need to pay attention to!
When filing your 2018 taxes, homeowners need to be aware of a number of new things. While the laws are constantly changing, a lot of new policies have come into effect recently. Investors must be diligent to file their forms properly and capitalize on the deductions available to them. You don’t want to be overpaid or not paying enough, causing trouble down the road. Four of the most critical mistakes homeowners make when filing their 2018 taxes in Indianapolis are discussed below.
#1 – Can No Longer Deduct Moving Expenses
Previously, when you moved to a new home over 50 miles away, you were able to deduct moving expenses. As of 2018, no matter how far you go, you can no longer deduct your moving expenses, but there are some alternatives. This change has a tremendous impact on people moving a long way. Moving trucks, traveling costs, storage, and many other relocation expenses can add up to thousands of dollars you’ll have to pay taxes on, unfortunately. People all over the country had previously advantage of deductible costs when making state to state moves. Today, this deduction is only available to people who serve in the US Armed Forces.
#2 – Property Taxes And Mortgage Interest Deductions
These deductions are now being closed down. The deduction you can take is now capped at $10,000 for your state, local and property taxes. This number drops down to $5,000 if you are married and filing separately. To pay the deduction, you must be the homeowner. If you help with your property taxes a friend or family member, the amount is not deductible as taxes are levied on you. If you are taking care of someone else’s bills in their entirety, there is still a small deduction available, but you can no longer get the dependent credit of years past. You pay interest on your mortgage as long as the debt is less than $750k. This amount had previously been 1 million. Also, you can deduct any mortgage points paid and every year the insurance premiums you pay for the house. This is the upside to at least it’s deductible to pay interest on your outstanding loans!
#3 – Exclude Your Gains
Here’s a good one for people who have recently sold a property at a profit. You can now exclude your property gains up to $250,000 and up to $500,000 if you file jointly. We met a lot of people who held on to an unwanted property just because they didn’t want to deal with taxes on capital gains. Most of these individuals made less than $250k or $500k, and wouldn’t have to worry about first paying the taxes. While many people are concerned about capital gains taxes, in order to be affected, you will have to make some serious profits. Plus, if you choose to invest your profits in a “like – kind” investment that actually covers a wide range of investment options, you can avoid these taxes.
#4 – Missing Write-Offs
It’s like missing out on free money on your deductions. As a homeowner from Indianapolis, it’s important to capitalize on all the deductions you owe. Some common ones, including medically necessary home improvements, solar panels, and other improvements made throughout the year, may be missing. If you’re an investor in property, You can write off your administration costs, travel costs and administrative costs. You will also be able to deduct the fees for lawyers, accountants, and property managers ‘ professional services as long as their bills are for your investment property alone.
With all the changes in the deduction, it is important to note that under new tax laws the standard deduction has almost doubled. Single people can now deduct $12,000, whereas in the past they only deducted $6,500. Married couples can now deduct $24,000 from the $13,000 they could take in previous years. This means that many more people will be better off with the standard deduction as opposed to all itemization. If you haven’t had any major changes over the past year, and if your taxes are low, the standard deduction will probably be right for you.