Publication 530 - Tax Information For Homeowners

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551

Basis of Assets

Forfeited deposits, down payments, or

Introduction

earnest money.

555

Community Property

This publication provides tax information for

587

Business Use of Your Home

Real Estate Taxes

first-time homeowners. Your first home may be

936

Home Mortgage Interest Deduction

a house, condominium, cooperative apartment,

Most state and local governments charge an

mobile home, houseboat, or house trailer.

Form (and Instructions)

annual tax on the value of real property. This is

The following topics are explained.

called a real estate tax. You can deduct the tax if

8396 Mortgage Interest Credit

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it is based on the assessed value of the real

How you treat items such as settlement

5405 First-Time Homebuyer Credit

property and the taxing authority charges a uni-

and closing costs, real estate taxes, sales

form rate on all property in its jurisdiction. The

taxes, home mortgage interest, and re-

See How To Get Tax Help, near the end of

tax must be for the welfare of the general public

pairs.

this publication, for information about getting

and not be a payment for a special privilege

publications and forms.

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What you can and cannot deduct on your

granted or service rendered to you.

tax return.

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Note. You may be able to deduct $500

The tax credit you can claim if you re-

What You Can and

($1,000, if married filing jointly), for real estate

ceived a mortgage credit certificate when

taxes you paid even if you do not itemize deduc-

you bought your home.

Cannot Deduct

tions on your income tax return. See your tax

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Why you should keep track of adjustments

return instructions for additional information.

to the basis of your home. (Your home’s

To deduct expenses of owning a home, you

basis generally is what it costs; adjust-

must file Form 1040 and itemize your deduc-

ments include the cost of any improve-

Deductible Real Estate Taxes

tions on Schedule A (Form 1040). If you itemize,

ments you might make.)

you cannot take the standard deduction.

You can deduct real estate taxes imposed on

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What records you should keep as proof of

This section explains what expenses you

you. You must have paid them either at settle-

the basis and adjusted basis.

can deduct as a homeowner. It also points out

ment or closing, or to a taxing authority (either

expenses that you cannot deduct. There are

directly or through an escrow account) during

Comments and suggestions. We welcome

four primary discussions: real estate taxes,

the year. If you own a cooperative apartment,

your comments about this publication and your

sales taxes, home mortgage interest, and mort-

see Special Rules for Cooperatives, later.

suggestions for future editions.

gage insurance premiums. Generally, your real

Where to deduct real estate taxes. Enter the

estate taxes, home mortgage interest, and mort-

You can write to us at the following address:

amount of your deductible real estate taxes on

gage insurance premiums are included in your

Schedule A (Form 1040), line 6.

house payment.

Internal Revenue Service

Real estate taxes paid at settlement or clos-

Individual Forms and Publications Branch

Your house payment. If you took out a mort-

ing. Real estate taxes are generally divided so

SE:W:CAR:MP:T:I

gage (loan) to finance the purchase of your

that you and the seller each pay taxes for the

1111 Constitution Ave. NW, IR-6526

home, you probably have to make monthly

part of the property tax year you owned the

Washington, DC 20224

house payments. Your house payment may in-

home. Your share of these taxes is fully deducti-

clude several costs of owning a home. The only

ble, if you itemize your deductions.

We respond to many letters by telephone.

costs you can deduct are real estate taxes actu-

Division of real estate taxes. For federal

Therefore, it would be helpful if you would in-

ally paid to the taxing authority, interest that

income tax purposes, the seller is treated as

clude your daytime phone number, including the

qualifies as home mortgage interest, and mort-

paying the property taxes up to, but not includ-

area code, in your correspondence.

gage insurance premiums. These are discussed

ing, the date of sale. You (the buyer) are treated

in more detail later.

You can email us at *taxforms@irs.gov. (The

as paying the taxes beginning with the date of

asterisk must be included in the address.)

Some nondeductible expenses that may be

sale. This applies regardless of the lien dates

Please put “Publications Comment” on the sub-

included in your house payment include:

under local law. Generally, this information is

ject line. Although we cannot respond individu-

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included on the settlement statement you get at

Fire or homeowner’s insurance premiums,

ally to each email, we do appreciate your

closing.

and

feedback and will consider your comments as

You and the seller each are considered to

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we revise our tax products.

The amount applied to reduce the princi-

have paid your own share of the taxes, even if

pal of the mortgage.

one or the other paid the entire amount. You

Ordering forms and publications. Visit

each can deduct your own share, if you itemize

to download forms and

deductions, for the year the property is sold.

publications, call 1-800-829-3676, or write to the

Minister’s or military housing allowance. If

address below and receive a response within 10

you are a minister or a member of the uniformed

Example. You bought your home on Sep-

days after your request is received.

services and receive a housing allowance that is

tember 1. The property tax year (the period to

not taxable, you still can deduct your real estate

which the tax relates) in your area is the calen-

taxes and your home mortgage interest. You do

Internal Revenue Service

dar year. The tax for the year was $730 and was

not have to reduce your deductions by your

1201 N. Mitsubishi Motorway

due and paid by the seller on August 15.

nontaxable allowance.

Bloomington, IL 61705-6613

You owned your new home during the prop-

erty tax year for 122 days (September 1 to De-

Nondeductible payments. You cannot de-

cember 31, including your date of purchase).

Tax questions. If you have a tax question,

duct any of the following items.

You figure your deduction for real estate taxes

check the information available on

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Insurance (other than mortgage insurance

on your home as follows.

or call 1-800-829-1040. We cannot answer tax

premiums), including fire and comprehen-

questions sent to either of the above addresses.

Enter the total real estate taxes for

sive coverage, and title insurance.

the real property tax year . . . . . . .

$730

Useful Items

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Enter the number of days in the

Wages you pay for domestic help.

property tax year that you owned the

You may want to see:

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Depreciation.

property . . . . . . . . . . . . . . . . . .

122

Divide line 2 by 366 . . . . . . . . . .

.3333

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The cost of utilities, such as gas, electric-

Publication

Multiply line 1 by line 3. This is your

ity, or water.

deduction. Enter it on Schedule A

523

Selling Your Home

(Form 1040), line 6 . . . . . . . . . . .

$243

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Most settlement costs. See Settlement or

527

Residential Rental Property

closing costs under Cost as Basis, later,

You can deduct $243 on your return for the

for more information.

547

Casualties, Disasters, and Thefts

year if you itemize your deductions. You are

Page 2

Publication 530 (2008)

Publication 530 - Tax Information For Homeowners - 2008 Page 2

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