Tax Tips for Home Buyers
and Sellers

When Filing 2013 Taxes

February 5, 2014 WHERE LOANS CLICK.
You are receiving this one-time email because you purchased or refinanced a home in 2013 using As your mortgage lender, we want you to get the benefit of the tax deductions you are allowed and we thought you would appreciate these Tax Tips for filing your 2013 taxes.

The Highlights

  • If you didn't receive a 1098 because you paid less than $600 in true points and interest you can still use your Settlement Statement from closing to find this information!
  • Tax deductions that occur yearly - mortgage interest and taxes.
  • One time tax deductions on your HUD closing statement.
    (You must itemize to take these allowances)
  • Capital gains may be excluded when you sell a home.
  • Keep good records so you can easily determine the basis for your home sale.
  • Mortgage insurance premiums may be tax deductible!
    (see IRS Publication 936 for eligibility)

Take advantage of all of the deductions you are allowed.

There are fundamental tax benefits of owning a home. Under IRS rules, you have the choice of itemizing or claiming the standard deductions. If you own a home, it is more likely that you will itemize the deductions using the Schedule A Form 1040. To see more tax information for first time homebuyers review this link Internal Revenue Form 530. Many deductions or costs have exceptions that you must meet in order to claim them.

There are two types of deductions: one time and recurring.

Your HUD document provides important tax information for one time deductions. If you purchased a home in 2013, your HUD documentation that you received at closing or escrow provides your itemized closing costs.

You can call to request a duplicate copy of your HUD closing statement.

One Time Deductions:
  • Loan origination points - primary residence only.
    (Note: The buyer treats seller-paid points as if he or she had paid them.)
  • Real estate taxes paid at settlement or closing.
  • Mortgage interest paid at settlement.
  • Mortgage insurance paid at settlement: Limited by adjusted income reported (see IRS Publication 936).
Recurring Deductions:
  • Mortgage interest: If the mortgage is on your primary residence or a second home.*
  • Real estate taxes: Property taxes actually paid in the tax year.
  • Late payment charges on a mortgage: Only deductible if it was not for a specific service in connection with your loan.
  • Mortgage prepayment penalties: Only deductible if it was not for a specific service in connection with you loan.
  • Mortgage insurance premiums: Limited by adjusted income reported (see IRS Publication 936).

* Internal Revenue Form 1098 indicates where to find mortgage interest you have paid.    You should receive a Form 1098 in the mail from your mortgage lender.

In-eligible Deductions:

  • Mortgage principal payments.
  • VA funding fees.
  • Credit report fees.
  • Loan application fees.
  • Loan assumption fees.
  • Notary fees.
  • Mortgage note preparation costs.
  • Appraisal fees by mortgage lender.
  • Home inspections.
  • Moving costs. Unless you relocated to a new job, restrictions apply.
  • Cleaning costs when moving in or out of a home.
  • Condominium homeowner association assessments.
  • Condominium homeowner association application, move-in and move-out fees.
  • Rent for occupancy before closing.
  • Homeowner's insurance premiums.
  • Wages for household help.
  • Depreciation.
  • Contributions to tax escrow accounts that were not paid to a taxing authority.
  • The cost of cable-TV, electricity, gas, telephone or water.
  • Charges for services such as trash collection or periodic service charges for lawn mowing or snow shoveling when in violation of local ordinances.
  • Repairs: An expense that keeps your home in ordinary and efficient operating condition such as fixing leaking gutters, broken windows and cracked drywall.
  • Gifts to buyers or sellers such as flowers, gift baskets or entertainment.
  • Your own labor for an improvement: An improvement is based on the actual costs of material and labor you have paid for.

You can find additional resources regarding Home Mortgage Tax Deduction Laws at and IRS Publication 936.

Back to top

If you sold a home before buying your new home, you may consider the following

How do you exclude a capital gain when you are selling your home?

When selling your home, you may incur a capital gain on the amount that your sales price exceeds your cost basis.

To exclude capital gain, you generally must have owned the property and lived in the property as your primary residence for at least 2 years during the 5-year period that ends with the date of the home sale. You may exclude the gain up to the limit of $250,000 if filing single and $500,000 if filing jointly.

Your primary residence may be a:

  • House
  • Houseboat
  • Mobile home
  • Cooperative or Apartment
  • Condominium

What are the factors that determine whether a home is your "primary residence?"

  1. Your place of employment.
  2. The location of your family members' main home.
  3. Your mailing address for bills and correspondence.
  4. The address listed on your:
    1. Federal and state tax returns,
    2. Driver's license,
    3. Car registration, and
    4. Voter registration card.
  5. The location of the banks you use.

Internal Revenue Publication 523 contains more detail about Selling Your Home and the Exclusion of Capital Gains.

In determining the basis, you must separate deductions that can be taken now from your costs that must be deferred and are considered part of your basis.

What is the Basis?

It is the starting cost for figuring a gain or loss when you sell your home. This starting cost is also used to determine depreciation if you use part of your home for business. Basis must be fair market value. Certain costs can be added to your basis or subtracted, which are called adjustments.

Increases to adjustments are:
Putting an addition on your home, paving a driveway or installing central air-conditioning.
Decreases to adjustments are:
Casualty loss not covered by insurance, payments received for an easement granted, or depreciation if home is used for business or rental.


  • Transfer taxes - State, county or local: Charges by governments you paid when a home is bought or sold.
  • Owner's title insurance.
  • Recording fees: Fees charged by governments to have mortgages, satisfactions, deeds and other legal documents registered into databases.
  • Legal and Abstract fees.
  • Property surveys.
  • Real estate brokerage commissions.
  • Local assessments that increase the value of your property: New sidewalks, streets, sewer and water systems are costs.
  • Special homeowners association condominium assessments that cover capital improvements such as a new roof, not roof repairs.
  • Charges for installing utility services for new construction.
Internal Revenue Publication 523 contains more detail about figuring your basis.

Keep good records so you can easily determine the basis when you sell your home.

Back to top

Store your records.

The IRS requires that you keep records that affect the basis cost and deductions until the limitations for income tax returns expires, typically a set period of time after you sell your home.

Need additional information?

Please email us at or
call us Toll Free at 877-523-3886.

Founded in 1999, provides residential mortgage lending in 19 states across the United States. is an Internet mortgage banker, based in Charlotte, NC, providing personalized mortgage services that eliminate excessive fees and paperwork and are faster, less cumbersome and less stressful than typical, offline loan services.

By utilizing the Internet and advanced technology processes, enables consumers to obtain home purchase, refinance and debt consolidation loans from the convenience of their own homes at mortgage rates that are consistently lower than the national average.

Copyright 2014 All rights reserved. respects your privacy, using your email information only for this one-time informational email.

If you would like to be removed from this list, you may unsubscribe here