Here are 4 ways to get more money and stay out of trouble.
As a homeowner, your 2014 tax forms might as well have “déjà vu“stamped all over them, especially since Congress has extended some temporary forms of tax relief.
So relax. You know the drill. Or do you?
Let’s find out. Before you do your taxes or gather the paperwork for an accountant to do them, take our quiz on the credits, exemptions and deductions a homeowner can claim for 2014. It may help you ballpark that big refund.
1. You can deduct up to _________ on your mortgage interest.
Answer: You can deduct up to $1 million on interest for mortgages to buy, build or improve a home (or $500,000 if you’re married, filing separately). Also, you can deduct up to $100,000 (or $50,000 for married, filing separately) for interest on loans secured by the residence, such as a home equity line of credit, which can pay for, say, college tuition
2. If you’re going to claim a home office as a deduction, the room must be used exclusively for business – true or false?
True. If you’re claiming this deduction, don’t even think about turning that room into an office/gym, or an office/occasional spare bedroom. A simplified option for claiming the deduction became available in 2013. If you use the simplified option, the home office deduction is limited to $1,500 per year, based on $5 per square foot for up to 300 square feet.
3. To qualify for capital gains exclusion on a home sale, you must own and live in a home for at least __ of the past __ years before selling it.
Answer: To qualify for the $250,000 capital gains exemption on a home sale – or $500,000 if married and filing jointly – you must own and live in the home for at least two of the past five years before the sale closes.
4. What is the limit on the number of residences for which homeowners can deduct the property taxes they pay?
Answer: You can deduct property taxes on however many homes you have, and even on vacant land you own. But you can’t deduct one-time assessments for costs such as street improvements or sewer lines.
Of course, this basic quiz is meant as a guide.
The experts suggest you do additional research or consult a tax adviser before filing.