Homeowners can benefit from some helpful tax deductions when filing this year.  "Thanks to the efforts of many real estate industry groups including the National Association of Realtors, many of the tax benefits that homeowners enjoy-which were on the chopping block over the past few months-have been protected and extended through the 2013 tax season." writes Sam DeBord for REALTOR.com.

It's good to know what deductions you can take for owning a home.  Not all of these deductions may apply to you, it's best to check with your tax specialist for further details.

1. Mortgage Interest Deduction- "Americans save around $100 million every year by deducting mortgage interest on their tax returns." says DeBord.

2. Home Improvement Loan Interest Deduction- If you have taken out a loan for home improvements, you can deduct the interest you pay on loans with balances up to $100,000.

3. Private Mortgage Insurance Deduction- DeBord says the extension of this tax deduction in 2013 was one of many last-second saves by real estate industry advocates.

4. Mortgage Points/Origination Deduction- If you have a new loan or a refinance, you can usually deduct the fees.

5. Energy Efficient Upgrades/Repairs Deduction- This is actually a tax credit which is applied as a direct reduction of how much tax you owe.

6. Profit on Sale of Real Estate Deduction- You can deduct the profit you make when selling your primary residence.  There are specific requirements for this that your tax person can help you with.

7. Real Estate Selling Cost Deduction- "By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property, and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home." says DeBord.  "This basically raises the original price you paid for the home.  Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs.  When the new cost basis price is compared to your selling price, it reduces your potentially-taxable profit on the home significantly."

8. Home Office Deduction- Based on the size of your home office, you can deduct a portion of your utilities and even your mortgage.  The space must only be used for business (so the kitchen table is out) and it must be your primary office.  Check with your tax professional for more details.

9. Property Tax Deduction- This was designed so that you don't pay income tax on your property tax.

10. Loan Forgiveness Deduction- Thankfully, the Mortgage Debt Forgiveness Relief Act of 2007 was extended through 2013. "It was created when short sales were becoming a new and growing part of the real estate market." Says DeBord. "An underwater homeowner might convince their lender to agree to a short sale of their home at $100,000, even though they owe $150,000 on their mortgage. While the lender forgives the extra $50,000 owed after the short sale, the government views it as $50,000 in taxable income (a gift from the lender to the borrower). But the Forgiveness Act relieves the taxpayer of this burden.

DeBord cautions that you should ask your tax professional for guidance before taking any of these deductions.  The last thing anyone wants is to be audited. 

Read the full details on these deductions at REALTOR.com.

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You found your dream home and agreed on a price, got your financing and set the date to close.  One item that can take consumers by surprise can be the cost of closing the loan.

"You've got to think beyond the interest rate and pay close attention to those pesky fees to avoid overpaying for closing costs." says Polyana da Costa for BankRate.com. "The average cost to close on a $200,000 mortgage in the United States is $3,754, according to Bankrate's annual survey of closing costs. That includes fees charged by the lender such as origination fees, processing fees and third-party fees such as title insurance."  Closing costs in Colorado on the same loan averaged $3199 in 2012.

When shopping for a mortgage, pay attention to the costs associated with closing, as well as the interest rate.  "Closing fees can vary significantly from lender to lender." she says. The same loan could cost you $2,000 in closing fees at one lender while another might charge $1,000 for the same loan.

The fees associated with a closing include: application fees, processing fees, underwriting fees, origination fees and document-preparation fees. "Some lenders charge one or two of these fees. Others charge all of them." says da Costa. "But comparing apples to apples isn't as simple as it should be when it comes to shopping for a mortgage. Lenders have different names for the fees they charge, and the fees can vary depending on the interest rate and other loan terms."

Make sure you talk to more than one lender to compare the costs.  "All lender closing fees should be noted on the Good Faith Estimate form that lenders are required to provide borrowers within 72 hours after they apply for a loan. The GFE is a consumer's best comparison tool when it comes to shopping for the best mortgage deal." offers Jason Auerbach of First Choice Loan Services in New York.

Understanding the whole picture when it comes to buying a house can help you avoid any nasty surprises at closing time.  Make sure you understand how much you will need to pay to close the deal.

Read more at BankRate.com.

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Posted in Buyer Resources, Headlines

Home prices in the Denver metro area showed the highest growth rate since October 2001, according to The Colorado Division of Housing (CDOH).

Denver showed an 8.5 percent increase, year over year, from December 2011 to December 2012. Denver was one of nineteen cities nationwide showing an increase.  "The largest increases were in Phoenix and San Francisco with year over year increases of 23.0 percent and 14.4 percent, respectively." reports the CDOH.

Denver never experienced the price bubble that affected most metropolitan areas of the U.S. and therefore our prices didn't fall as low as others.  The metro Denver home price index is at the highest value seen since October of 2007.

This CDOH graph provides a close look at year-over-year changes in the Denver index:

"The index went negative as the economy began to slow in 2007 and remained negative until this year with the exception of the period in which the homebuyer tax credit pushed up prices temporarily. Recent home price growth is accelerating as inventory declines, household formation continues, and rental housing continues to become more expensive." explains CDOH.

Read more at CDOH.

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Home prices are rising in Colorado Springs.  Asking prices for homes were up, year over year, in January by 2.6 percent according to The Colorado Division of Housing (CDOH).

Overall, Colorado showed a 9,8 percent increase during the same time period. "Since mid-2012, year-over-year growth in the home price index (HPI) for Colorado has been robust, as inventory continues to decline and demand for home purchase remains steady or increasing among Colorado residents." writes Ryan McMaken, an economist with CDOH.

Read more at CDOH.

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Don't panic, says Nicholas Pell on Mint.com.  If you will owe money to the IRS on April 15^th this year, just remember that you aren't the first person to owe money and you won't be the last.  "Despite their reputation to the contrary," he says, "the IRS customer service representatives are some of the friendliest people you're ever going to owe money to.  (They) only aggressively pursue people who are actively avoiding paying them back."

So, how do you stay in the IRS's good graces?  Pell offers some friendly advice:

1.       File on Time:  Avoid late penalties, fees and interest by making sure you file on time.

2.       Pay as Much as You Can.  As a good faith measure, pay as much as you can when you file, thus beginning the process of paying down your debt.

3.       Make a Deal:  It might not be easy, but it's also not impossible.  "This is for people who will have a serious economic hardship paying their back taxes to the IRS." says Pell. "You begin the process of making a deal by filing a Form 656, Offer in Compromise.

4.       Installment Payments:  Once you make a deal with the IRS, make sure you make your installment payments on time.  "To simply stop making payments without communication is one of the worst things you can do." Counsels Pell. "If you find that you can't make the installment payments as agreed, call the IRS. There are a number of options they can offer, such as a reduced installment payment or a compromise offer."

5.       Hire an Advocate:  You don't always need an attorney to resolve your problems.  Start with the Taxpayer Advocate Service which is a free, independent organization that helps taxpayer's find solutions to their repayment problems.  "Our job is to ensure that every taxpayer is treated fairly," states the website, "and that you know and understand your rights."  

You can contact an advocate at the TAS through a toll-free number. Go to their website to find someone to look at your case and advise you, whether or not, they can help you.

6.       Or Maybe You DO Need an Attorney: There's comes a time when it is necessary to hire an attorney to help you resolve your debt.  "This is generally for people who have very large amounts of debt and need to do something to lower the amount." Says Pell.  "A tax lawyer or CPA has more experience going up against the IRS in his little finger than you do in your whole body. It might cost a bit of change up front, but when you've tried everything else, this is your only option."

Again, says Pell, don't panic.  Take these steps to help you on your way to clearing your debt.  And then, this year, make sure you are putting away enough money to cover your tax bill next year!  (Read:  2013: The Year to Save More)

See more at Mint.com

photo credit: Philip Taylor PT

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