PARAMOUNT MORTGAGE - LENDER'S BLOG

With about a month left before income taxes are due, many of the nation’s 75 million home owners will be taking advantage of the myriad tax benefits available to them.

The ability to deduct the interest paid on a mortgage can mean significant savings at tax time.

For example, a $200,000 home purchased in 2010 with a 4.5 percent, 30-year fixed-rate mortgage, could reward an owner with nearly $3,500 of federal tax savings when they file.

Last year’s $8,000 First-Time Home Buyer and $6,500 Repeat Home Buyer Tax Credit is available to be claimed by those who didn’t opt to file amended tax returns.

Listed below is a brief synopsis of popular deductions and credits. Home owners need to consult with a professional tax advisor about IRS rules and requirements before claiming their deductions.

You can exclude up to $250,000 of capital gain on the sale of your principal residence (up to $500,000 for joint filers). Home owners must have resided in their home for two out of the last five years.

Your mortgage interest deduction can apply to your principal residence and one additional residence. You can deduct interest on your mortgage up to $1 million when you itemize.

The interest on a home-equity loan is deductible up to $100,000 for ordinary income purposes. When using the alternative minimum tax, interest is deductible only if the loan is used to acquire, build, or substantially improve a home.

Mortgage loan points are deductible in the year you paid them, as long as the points represent a customary practice in your area. Points paid on refinancing a loan must be deducted over the term of the loan.

Your Mortgage Insurance Premium (MIP) is deductible through 2010. The mortgage insurance had to be originally acquired on or after January 1, 2007.

You can take state and local property taxes as an itemized deduction. An option to take up to $500 ($1,000 for joint filers) as an additional standard deduction for real estate taxes expired at the end of 2009 and is not available for 2010.

If you rented your home for fewer than 15 days during the year, you don’t have to include that rental income in your gross income. You can’t deduct any expenses related to the rental.

Home owners can claim a 30% tax credit, up to $1500, for purchases and installation of qualified energy-efficient products by December 31, 2010. An additional 30% credit is available for qualified alternative energy-saving equipment (fuel cells, solar electric equipment, wind energy projects and geothermal heat pumps).