Tips for Real Estate Tax Deductions

April 15 is approaching. It’s time to start thinking about tax incentives and how to save money on your home purchase.

Fortunately, Uncle Sam has some nice perks for homeowners. As the big date gets closer, start contemplating the ways you can make deductions for repairs, your mortgage interest or even take the famous home-office deduction.

A recent section of CNN Money discussed a few tipcs on how to get the most out of your home at tax time.

1. Deduct that mortgage interest
Deducting your mortgage interest is one of the biggest freebies the goverment. But keep in mind that the longer you live in your home, the less valuable your deduction will be. That’s because most mortgages front-load the interest payments, meaning that as the years go by, your monthly payment will go more towards paying down the principle, and less towards interest on the loan.

You could also consider paying off your mortgage early, but read the fine print because you may get hit with prepayment penalty fees. But don’t worry. At least you can deduct these penalties from your taxes.

2. Keep your receipts
If you have made home improvements or repairs, make sure you keep all of those receipts. When you sell your home, you can use these expenses to reduce the tax you pay on the profit. That profit is called a capital gain. The less profit you show, the less tax you’ll have to pay.

3. Relocation compensation
Whether you rent or buy, if you have to relocate because of your job, whether it’s your first job, a new job or the same job, you may qualify for a moving deduction. This can be a pretty big tax deduction, especially if you made a major cross-country move to take a new job.

You will qualify for this deduction if your new job is at least 50 miles away from where you live. You’ll be able to deduct expenses like your moving van, moving services, the cost of moving your car or your pets, the use of storage facilities and any hotel rooms you had to stay in while making the move.

4. Get damage deductions
If your home sustained damage because of a tornado, a hurricane or theft and you were not compensated by insurance, you may be able to get a deduction on your taxes.

There are some rules. The cost of un-reimbursed damage must be more than 10 percent of your adjusted gross income. And to make matters more complicated, you need to subtract $100 from that un-reimbursed damage before you do that calculation.

These rules we just outlined DON’T apply to victims of Hurricane Katrina. Anything that wasn’t covered by insurance is fully deductible. If your area is declared a presidential disaster area, you have the right to amend last year’s tax return and claim this year’s loss. This will help you get a refund more quickly.

Make your Florida home loan work for you, people. See how much you can save if you qualify for any of these deductions.