Deductions & credits

The sale of your home in 2016 may qualify for the exclusion of you lived in your home for at least 24 months of the previous five years before the date of sale.  If you made money on the sale of your house, we can help you find out if this profit is tax-free, up to $250,000 ($500,000 for married filing jointly). 

To record the sale of your home while you are logged into your TurboTax Self Employed account follow these steps:

• My Account > Tools > Topic Search > Type sale of home > Go
• Continue to enter your sale and TurboTax will determine if you have gain and if you qualify for the exclusion
  

When you buy a house there are a few things you can deduct in the year of purchase, and then going forward.  

You will deduct the mortgage interest and property tax paid in 2016 if you are able to itemized deductions.  Be sure to include any points as well as mortgage insurance premiums (also known as MIP or PMI). This information will be on the settlement statement, usually known as the HUD1, or on the year end statement from the lender.  If property taxes were paid by you and not the lender you include that amount from your actual payments in 2016.

• The items on your HUD-1 Settlement Statement will fall into categories noted. 
  

• Seller/Buyer:  Amounts shown for your prorated share of property tax for the year of sale - 2016 (deducted on itemized deductions)
• Buyer:  Amounts shown for advance payments to escrow to cover any expense that may be needed before enough mortgage payments can be made such as insurance and/or property taxes (not deductible)
  
• Buyer:  Points if applicable and mortgage interest (deducted on itemized deductions).  Points paid by the seller are deducted by the buyer. Qualifying mortgage insurance premiums prorated over 84 months.  Note:  VA funding fee or Rural Housing Service funding fee is fully deductible in the year of purchase.
  
• Buyer:  Occasionally there is a small amount of mortgage interest charged at settlement to cover the period from approval to closing.  If you have the same lender in December it may be included on the Form 1098.
• Any other items on the settlement statement will be added as purchase expenses to the purchase price reducing the taxable gain on the sale in the future.

• If the standard deduction is used because it is higher, then you would not use these expenses.

The purchase price will be contained with the documents showing your original investment when you bought it and will be used against a future selling price to reduce any taxable gain at that time (including your down payment).  If you make improvements that extend the life of the property retain the records to continue to track your cost of the property.

To record the expenses of the purchase of your new home while you are logged into your TurboTax Self Employed account follow these steps:

• My Account > Tools > Topic Search > Type itemized deductions > Go
• Continue to enter your expenses
  
• Click the screenshots attached to enlarge and view for assistance.