A trailer can be your primary residence, entitling you to take advantage of the same tax deductions as a homeowner of a typical house. Your home-related itemized deductions, plus your other itemized deductions on Schedule A must add up to more than the standard deduction or you won't be able to use the deduction. Here are the deductions you can take for your new home:
- Your property taxes. Don’t forget to include any taxes you may have reimbursed the seller for. These are taxes the seller had already paid before you took ownership. You won't get a 1098 report listing these taxes. Instead, that amount will be shown on the settlement sheet.
- The mortgage interest on your primary residence, as well as on a second residence. (There are limits, but relatively few taxpayers are affected.)
- The interest on up to $100,000 borrowed on a home equity loan or home equity line of credit, regardless of the reason for the loan.
- Points that you paid when you purchased the house (or those that you convinced the seller to pay for you).
- Home improvements required for medical care.
Here is more information about taking the itemized deduction:
What is Schedule A?
The IRS lets you take either the standard
deduction or the itemized deduction. If
you itemize (about 1/3 of all taxpayers do), TurboTax automatically fill
out Schedule A, Itemized Deductions and switch you over to the 1040
long form.
Schedule A lets you report certain deductible expenses like:
- Medical and dental costs
above and beyond 10% of your AGI
- State, local, real estate,
and personal property taxes
- Home mortgage interest and
PMI
- Charitable donations and
gifts
- Casualty or theft losses
- Unreimbursed employee
expenses above and beyond 2% of your AGI
You can't deduct the following payments for a personal residence:
- Dues to a homeowners association
- Insurance on your home
- Appraisal fees for your home
- The cost of improvements to your home, except in the relatively rare case where they qualify as a medical expense. (But keep those receipts. They may help reduce your taxes when you sell your home.)
