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Amend 2012 Taxes

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Amend 2012 Taxes

Amend 2012 taxes Publication 570 - Introductory Material Table of Contents Future developments. Amend 2012 taxes What's New Reminders IntroductionOrdering forms and publications. Amend 2012 taxes Tax questions. Amend 2012 taxes Useful Items - You may want to see: Future developments. Amend 2012 taxes For information about any additional changes to the 2013 tax law affecting Pub. Amend 2012 taxes 570, please go to www. Amend 2012 taxes irs. Amend 2012 taxes gov/pub570. Amend 2012 taxes What's New Maximum income subject to social security tax. Amend 2012 taxes . Amend 2012 taxes  For 2013, the maximum amount of self-employment income subject to social security is $113,700. Amend 2012 taxes Optional methods to figure net earnings. Amend 2012 taxes . Amend 2012 taxes  For 2013, the maximum income for using the optional methods is $4,640. Amend 2012 taxes Additional Medicare Tax. Amend 2012 taxes  Beginning in 2013, you may be required to pay Additional Medicare Tax. Amend 2012 taxes Also, you may need to report Additional Medicare Tax withheld by your employer. Amend 2012 taxes For more information, see Additional Medicare Tax under Special Rules for Completing Your U. Amend 2012 taxes S. Amend 2012 taxes Tax Return in chapter 4. Amend 2012 taxes Net Investment Income Tax. Amend 2012 taxes  Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Amend 2012 taxes 8% tax on the lesser of an individual's net investment income or the excess of the individual's modified adjusted gross income over a specified threshold amount. Amend 2012 taxes Bona fide residents of Puerto Rico and American Samoa who have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer's modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Amend 2012 taxes Also, bona fide residents must take into account any additional tax liability associated with the NIIT when calculating their estimated tax payments. Amend 2012 taxes The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Amend 2012 taxes For more information, see Net Investment Income Tax under Bona Fide Resident of American Samoa and Bona Fide Resident of Puerto Rico in chapter 3. Amend 2012 taxes Reminders Individual taxpayer identification numbers (ITINs) for aliens. Amend 2012 taxes  If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an ITIN. Amend 2012 taxes For details on how to do so, see Form W-7, Application for IRS Individual Taxpayer Identification Number, and its instructions. Amend 2012 taxes Allow 6 weeks for the IRS to notify you of your ITIN (8-10 weeks if submitted during peak processing periods (January 15 through April 30) or if you are filing from overseas). Amend 2012 taxes If you already have an ITIN, enter it wherever your SSN is requested on your tax return. Amend 2012 taxes Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Amend 2012 taxes The documentation requirements for individuals seeking an ITIN, have been superseded by these changes. Amend 2012 taxes Authorized representatives are required to complete forensic training and submit the certificate of completion to the IRS no later than January 31, 2014. Amend 2012 taxes Taxpayers and their representatives should review these program changes, which are further explained in the Frequently Asked Questions at www. Amend 2012 taxes irs. Amend 2012 taxes gov/Individuals/Individual-Taxpayer-Identification-Number-(ITIN), before requesting an ITIN. Amend 2012 taxes An ITIN is for tax use only. Amend 2012 taxes It does not entitle you to social security benefits or change your employment or immigration status under U. Amend 2012 taxes S. Amend 2012 taxes law. Amend 2012 taxes Electronic filing. Amend 2012 taxes . Amend 2012 taxes  You can e-file Form 1040-SS. Amend 2012 taxes For general information about  electronic filing, visit www. Amend 2012 taxes irs. Amend 2012 taxes gov/efile. Amend 2012 taxes Earned income credit (EIC). Amend 2012 taxes  Generally, if you are a bona fide resident of a U. Amend 2012 taxes S. Amend 2012 taxes possession, you cannot claim the EIC on your U. Amend 2012 taxes S. Amend 2012 taxes tax return. Amend 2012 taxes However, certain U. Amend 2012 taxes S. Amend 2012 taxes possessions may allow bona fide residents to claim the EIC on their possession tax return. Amend 2012 taxes To claim the EIC on your U. Amend 2012 taxes S. Amend 2012 taxes tax return, your home (and your spouse's if filing a joint return) must have been in the United States for more than half the year. Amend 2012 taxes If you have a child, the child must have lived with you in the United States for more than half the year. Amend 2012 taxes For this purpose, the United States includes only the 50 states and the District of Columbia. Amend 2012 taxes Special rules apply to military personnel stationed outside the United States. Amend 2012 taxes For more information on this credit, see Publication 596, Earned Income Credit. Amend 2012 taxes Form 8938, Statement of Specified Foreign Financial Assets. Amend 2012 taxes  If you have specified foreign financial assets in foreign jurisdictions valued above certain threshold dollar amounts, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, when you file your U. Amend 2012 taxes S. Amend 2012 taxes income tax return with the IRS. Amend 2012 taxes If you are required to file Form 8938, you do not have to report certain specified foreign financial assets on Form 8938. Amend 2012 taxes See Bona fide resident of a U. Amend 2012 taxes S. Amend 2012 taxes possession, in the Instructions for Form 8938 for more details. Amend 2012 taxes For additional details, go to the page for the Foreign Account Tax Compliance Act (FATCA) at www. Amend 2012 taxes irs. Amend 2012 taxes gov/businesses/corporations/article/0,,id=236667,00. Amend 2012 taxes html. Amend 2012 taxes If you do not have to file a federal income tax return with the United States, you are not required to file a Form 8938 with the IRS. Amend 2012 taxes Change of address. Amend 2012 taxes  If you change your mailing address, use Form 8822, Change of Address, to notify the Internal Revenue Service and U. Amend 2012 taxes S. Amend 2012 taxes possession tax administration, if appropriate. Amend 2012 taxes Mail Form 8822 to the Internal Revenue Service Center or U. Amend 2012 taxes S. Amend 2012 taxes possession tax administration for your old address (addresses for the Service Centers are on the back of the form). Amend 2012 taxes If you change your address before filing your tax return, write the new address in the appropriate boxes of your tax return when you file. Amend 2012 taxes Photographs of missing children. Amend 2012 taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amend 2012 taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amend 2012 taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amend 2012 taxes Introduction This publication discusses how to treat income received from the following U. Amend 2012 taxes S. Amend 2012 taxes possessions on your tax return(s). Amend 2012 taxes American Samoa. Amend 2012 taxes The Commonwealth of Puerto Rico (Puerto Rico). Amend 2012 taxes The Commonwealth of the Northern Mariana Islands (CNMI). Amend 2012 taxes Guam. Amend 2012 taxes The U. Amend 2012 taxes S. Amend 2012 taxes Virgin Islands (USVI). Amend 2012 taxes Unless stated otherwise, when the term “possession” is used in this publication, it includes the Commonwealths of Puerto Rico and the Northern Mariana Islands. Amend 2012 taxes Chapter 1 discusses the requirements for being considered a bona fide resident of the listed possessions. Amend 2012 taxes Chapter 2 gives the rules for determining if your income is from sources within, or effectively connected with a trade or business in, those possessions. Amend 2012 taxes Next, chapter 3 looks at the rules for filing tax returns when you receive income from any of these possessions. Amend 2012 taxes You may have to file a U. Amend 2012 taxes S. Amend 2012 taxes tax return only, a possession tax return only, or both returns. Amend 2012 taxes This generally depends on whether you are a bona fide resident of the possession. Amend 2012 taxes In some cases, you may have to file a U. Amend 2012 taxes S. Amend 2012 taxes return, but will be able to exclude income earned in a possession from U. Amend 2012 taxes S. Amend 2012 taxes tax. Amend 2012 taxes You can find illustrated examples of some of the additional forms required in chapter 5. Amend 2012 taxes If you are not a bona fide resident of one of the possessions listed earlier, or are otherwise required to file a U. Amend 2012 taxes S. Amend 2012 taxes income tax return, the information in chapter 4 will tell you how to file your U. Amend 2012 taxes S. Amend 2012 taxes tax return. Amend 2012 taxes This information also applies if you have income from U. Amend 2012 taxes S. Amend 2012 taxes insular areas other than the five possessions listed earlier because that income will not qualify for any of the exclusions or other benefits discussed in chapter 3. Amend 2012 taxes These other U. Amend 2012 taxes S. Amend 2012 taxes insular areas include: Baker Island, Howland Island, Jarvis Island, Johnston Island, Kingman Reef, Midway Islands, Palmyra Atoll, and Wake Island. Amend 2012 taxes If you need information on U. Amend 2012 taxes S. Amend 2012 taxes taxation, write to: Internal Revenue Service Philadelphia, PA 19255-0725 If you need additional information on your tax obligations in a U. Amend 2012 taxes S. Amend 2012 taxes possession, write to the tax department of that possession. Amend 2012 taxes Their addresses are provided in chapter 3 under the individual headings for each possession. Amend 2012 taxes Comments and suggestions. Amend 2012 taxes   We welcome your comments about this publication and your suggestions for future editions. Amend 2012 taxes   You can send us comments from www. Amend 2012 taxes irs. Amend 2012 taxes gov/formspubs/. Amend 2012 taxes Click on “More Information”and then on “Comment on Tax Forms and Publications. Amend 2012 taxes ” Or you can write to us at the following address: Internal Revenue Service Tax Forms and Publications SE:W:CAR:MP:TFP 1111 Constitution Ave. Amend 2012 taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Amend 2012 taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amend 2012 taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Amend 2012 taxes Ordering forms and publications. Amend 2012 taxes   Visit www. Amend 2012 taxes irs. Amend 2012 taxes gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Amend 2012 taxes Internal Revenue Service 1201 N. Amend 2012 taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amend 2012 taxes   If you have a tax question, check the information available on IRS. Amend 2012 taxes gov or call 1-800-829-1040. Amend 2012 taxes We cannot answer tax questions sent to either of the above addresses. Amend 2012 taxes You can get the necessary possession tax forms at the tax office for the appropriate possession. Amend 2012 taxes The office addresses are given in chapter 3. Amend 2012 taxes Useful Items - You may want to see: Publication 54 Tax Guide for U. Amend 2012 taxes S. Amend 2012 taxes Citizens and Resident Aliens Abroad 514 Foreign Tax Credit for Individuals 519 U. Amend 2012 taxes S. Amend 2012 taxes Tax Guide for Aliens Form (and Instructions) 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico) 1040-SS U. Amend 2012 taxes S. Amend 2012 taxes Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico) 1116 Foreign Tax Credit 4563 Exclusion of Income for Bona Fide Residents of American Samoa 4868 Application for Automatic Extension of Time To File U. Amend 2012 taxes S. Amend 2012 taxes Individual Income Tax Return 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI) 8689 Allocation of Individual Income Tax to the U. Amend 2012 taxes S. Amend 2012 taxes Virgin Islands 8898 Statement for Individuals Who Begin or End Bona Fide Residence In a U. Amend 2012 taxes S. Amend 2012 taxes Possession 8959 Additional Medicare Tax 8960 Net Investment Income Tax—Individuals, Estates, and Trusts Prev  Up  Next   Home   More Online Publications
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The Amend 2012 Taxes

Amend 2012 taxes Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. Amend 2012 taxes S. Amend 2012 taxes Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Amend 2012 taxes If you itemize, you cannot take the standard deduction. Amend 2012 taxes This section explains what expenses you can deduct as a homeowner. Amend 2012 taxes It also points out expenses that you cannot deduct. Amend 2012 taxes There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Amend 2012 taxes Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Amend 2012 taxes Your house payment. Amend 2012 taxes   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Amend 2012 taxes Your house payment may include several costs of owning a home. Amend 2012 taxes The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. Amend 2012 taxes These are discussed in more detail later. Amend 2012 taxes   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. Amend 2012 taxes Minister's or military housing allowance. Amend 2012 taxes   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. Amend 2012 taxes You do not have to reduce your deductions by your nontaxable allowance. Amend 2012 taxes For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. Amend 2012 taxes Nondeductible payments. Amend 2012 taxes   You cannot deduct any of the following items. Amend 2012 taxes Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Amend 2012 taxes Wages you pay for domestic help. Amend 2012 taxes Depreciation. Amend 2012 taxes The cost of utilities, such as gas, electricity, or water. Amend 2012 taxes Most settlement costs. Amend 2012 taxes See Settlement or closing costs under Cost as Basis, later, for more information. Amend 2012 taxes Forfeited deposits, down payments, or earnest money. Amend 2012 taxes Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Amend 2012 taxes You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Amend 2012 taxes You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Amend 2012 taxes If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Amend 2012 taxes However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Amend 2012 taxes Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Amend 2012 taxes This is called a real estate tax. Amend 2012 taxes You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Amend 2012 taxes The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. Amend 2012 taxes Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Amend 2012 taxes You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. Amend 2012 taxes If you own a cooperative apartment, see Special Rules for Cooperatives , later. Amend 2012 taxes Where to deduct real estate taxes. Amend 2012 taxes   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Amend 2012 taxes Real estate taxes paid at settlement or closing. Amend 2012 taxes   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Amend 2012 taxes Your share of these taxes is fully deductible if you itemize your deductions. Amend 2012 taxes Division of real estate taxes. Amend 2012 taxes   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Amend 2012 taxes You (the buyer) are treated as paying the taxes beginning with the date of sale. Amend 2012 taxes This applies regardless of the lien dates under local law. Amend 2012 taxes Generally, this information is included on the settlement statement you get at closing. Amend 2012 taxes   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. Amend 2012 taxes You each can deduct your own share, if you itemize deductions, for the year the property is sold. Amend 2012 taxes Example. Amend 2012 taxes You bought your home on September 1. Amend 2012 taxes The property tax year (the period to which the tax relates) in your area is the calendar year. Amend 2012 taxes The tax for the year was $730 and was due and paid by the seller on August 15. Amend 2012 taxes You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). Amend 2012 taxes You figure your deduction for real estate taxes on your home as follows. Amend 2012 taxes 1. Amend 2012 taxes Enter the total real estate taxes for the real property tax year $730 2. Amend 2012 taxes Enter the number of days in the property tax year that you owned the property 122 3. Amend 2012 taxes Divide line 2 by 365 . Amend 2012 taxes 3342 4. Amend 2012 taxes Multiply line 1 by line 3. Amend 2012 taxes This is your deduction. Amend 2012 taxes Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. Amend 2012 taxes You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. Amend 2012 taxes Delinquent taxes. Amend 2012 taxes   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Amend 2012 taxes If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Amend 2012 taxes You treat them as part of the cost of your home. Amend 2012 taxes See Real estate taxes , later, under Basis. Amend 2012 taxes Escrow accounts. Amend 2012 taxes   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Amend 2012 taxes You may not be able to deduct the total you pay into the escrow account. Amend 2012 taxes You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Amend 2012 taxes Your real estate tax bill will show this amount. Amend 2012 taxes Refund or rebate of real estate taxes. Amend 2012 taxes   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. Amend 2012 taxes If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. Amend 2012 taxes For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Amend 2012 taxes Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Amend 2012 taxes Charges for services. Amend 2012 taxes   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Amend 2012 taxes You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). Amend 2012 taxes    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. Amend 2012 taxes If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Amend 2012 taxes Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Amend 2012 taxes Assessments for local benefits. Amend 2012 taxes   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Amend 2012 taxes Local benefits include the construction of streets, sidewalks, or water and sewer systems. Amend 2012 taxes You must add these amounts to the basis of your property. Amend 2012 taxes   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Amend 2012 taxes An example is a charge to repair an existing sidewalk and any interest included in that charge. Amend 2012 taxes   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. Amend 2012 taxes If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Amend 2012 taxes   An assessment for a local benefit may be listed as an item in your real estate tax bill. Amend 2012 taxes If so, use the rules in this section to find how much of it, if any, you can deduct. Amend 2012 taxes Transfer taxes (or stamp taxes). Amend 2012 taxes   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Amend 2012 taxes If you are the buyer and you pay them, include them in the cost basis of the property. Amend 2012 taxes If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Amend 2012 taxes Homeowners association assessments. Amend 2012 taxes   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Amend 2012 taxes Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. Amend 2012 taxes As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Amend 2012 taxes You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. Amend 2012 taxes For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Amend 2012 taxes At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. Amend 2012 taxes At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. Amend 2012 taxes Tenant-stockholders. Amend 2012 taxes   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Amend 2012 taxes The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Amend 2012 taxes The units that the tenant-stockholder has the right to occupy can be rented to others. Amend 2012 taxes Deductible taxes. Amend 2012 taxes   You figure your share of real estate taxes in the following way. Amend 2012 taxes Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Amend 2012 taxes Multiply the corporation's deductible real estate taxes by the number you figured in (1). Amend 2012 taxes This is your share of the real estate taxes. Amend 2012 taxes   Generally, the corporation will tell you your share of its real estate tax. Amend 2012 taxes This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Amend 2012 taxes Refund of real estate taxes. Amend 2012 taxes   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. Amend 2012 taxes Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Amend 2012 taxes Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). Amend 2012 taxes Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. Amend 2012 taxes For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). Amend 2012 taxes If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. Amend 2012 taxes Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. Amend 2012 taxes Most home buyers take out a mortgage (loan) to buy their home. Amend 2012 taxes They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Amend 2012 taxes Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). Amend 2012 taxes However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. Amend 2012 taxes If either of these situations applies to you, see Publication 936 for more information. Amend 2012 taxes Also see Publication 936 if you later refinance your mortgage or buy a second home. Amend 2012 taxes Refund of home mortgage interest. Amend 2012 taxes   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. Amend 2012 taxes For more information, see Recoveries in Publication 525. Amend 2012 taxes The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Amend 2012 taxes See Mortgage Interest Statement , later. Amend 2012 taxes Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Amend 2012 taxes The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Amend 2012 taxes Prepaid interest. Amend 2012 taxes   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Amend 2012 taxes Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Amend 2012 taxes An exception (discussed later) applies to points. Amend 2012 taxes Late payment charge on mortgage payment. Amend 2012 taxes   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. Amend 2012 taxes Mortgage prepayment penalty. Amend 2012 taxes   If you pay off your home mortgage early, you may have to pay a penalty. Amend 2012 taxes You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Amend 2012 taxes Ground rent. Amend 2012 taxes   In some states (such as Maryland), you may buy your home subject to a ground rent. Amend 2012 taxes A ground rent is an obligation you assume to pay a fixed amount per year on the property. Amend 2012 taxes Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Amend 2012 taxes Redeemable ground rents. Amend 2012 taxes   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Amend 2012 taxes The ground rent is a redeemable ground rent only if all of the following are true. Amend 2012 taxes Your lease, including renewal periods, is for more than 15 years. Amend 2012 taxes You can freely assign the lease. Amend 2012 taxes You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. Amend 2012 taxes The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Amend 2012 taxes   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Amend 2012 taxes You cannot deduct them. Amend 2012 taxes Nonredeemable ground rents. Amend 2012 taxes   Payments on a nonredeemable ground rent are not mortgage interest. Amend 2012 taxes You can deduct them as rent only if they are a business expense or if they are for rental property. Amend 2012 taxes Cooperative apartment. Amend 2012 taxes   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . Amend 2012 taxes In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Amend 2012 taxes Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. Amend 2012 taxes For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. Amend 2012 taxes Refund of cooperative's mortgage interest. Amend 2012 taxes   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Amend 2012 taxes The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Amend 2012 taxes   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Amend 2012 taxes Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Amend 2012 taxes You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Amend 2012 taxes This amount should be included in the mortgage interest statement provided by your lender. Amend 2012 taxes See the discussion under Mortgage Interest Statement , later. Amend 2012 taxes Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Amend 2012 taxes Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Amend 2012 taxes Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Amend 2012 taxes A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Amend 2012 taxes See Points paid by the seller , later. Amend 2012 taxes General rule. Amend 2012 taxes   You cannot deduct the full amount of points in the year paid. Amend 2012 taxes They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. Amend 2012 taxes Exception. Amend 2012 taxes   You can deduct the full amount of points in the year paid if you meet all the following tests. Amend 2012 taxes Your loan is secured by your main home. Amend 2012 taxes (Generally, your main home is the one you live in most of the time. Amend 2012 taxes ) Paying points is an established business practice in the area where the loan was made. Amend 2012 taxes The points paid were not more than the points generally charged in that area. Amend 2012 taxes You use the cash method of accounting. Amend 2012 taxes This means you report income in the year you receive it and deduct expenses in the year you pay them. Amend 2012 taxes Most individuals use this method. Amend 2012 taxes The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Amend 2012 taxes The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Amend 2012 taxes The funds you provided are not required to have been applied to the points. Amend 2012 taxes They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Amend 2012 taxes You cannot have borrowed these funds. Amend 2012 taxes You use your loan to buy or build your main home. Amend 2012 taxes The points were computed as a percentage of the principal amount of the mortgage. Amend 2012 taxes The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. Amend 2012 taxes The points may be shown as paid from either your funds or the seller's. Amend 2012 taxes Note. Amend 2012 taxes If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. Amend 2012 taxes If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. Amend 2012 taxes Home improvement loan. Amend 2012 taxes   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. Amend 2012 taxes Refinanced loan. Amend 2012 taxes   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Amend 2012 taxes You can deduct the rest of the points over the life of the loan. Amend 2012 taxes Points not fully deductible in year paid. Amend 2012 taxes    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. Amend 2012 taxes Figure A. Amend 2012 taxes   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Amend 2012 taxes    Please click here for the text description of the image. Amend 2012 taxes Figure A. Amend 2012 taxes Are my points fully deductible this year? Amounts charged for services. Amend 2012 taxes   Amounts charged by the lender for specific services connected to the loan are not interest. Amend 2012 taxes Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Amend 2012 taxes You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Amend 2012 taxes For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Amend 2012 taxes Points paid by the seller. Amend 2012 taxes   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Amend 2012 taxes Treatment by seller. Amend 2012 taxes   The seller cannot deduct these fees as interest. Amend 2012 taxes However, they are a selling expense that reduces the seller's amount realized. Amend 2012 taxes See Publication 523 for more information. Amend 2012 taxes Treatment by buyer. Amend 2012 taxes   The buyer treats seller-paid points as if he or she had paid them. Amend 2012 taxes If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Amend 2012 taxes If any of those tests are not met, the buyer must deduct the points over the life of the loan. Amend 2012 taxes   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Amend 2012 taxes For more information about the basis of your home, see Basis , later. Amend 2012 taxes Funds provided are less than points. Amend 2012 taxes   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. Amend 2012 taxes In addition, you can deduct any points paid by the seller. Amend 2012 taxes Example 1. Amend 2012 taxes When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Amend 2012 taxes You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. Amend 2012 taxes Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Amend 2012 taxes You spread the remaining $250 over the life of the mortgage. Amend 2012 taxes Example 2. Amend 2012 taxes The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Amend 2012 taxes In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Amend 2012 taxes You spread the remaining $250 over the life of the mortgage. Amend 2012 taxes You must reduce the basis of your home by the $1,000 paid by the seller. Amend 2012 taxes Excess points. Amend 2012 taxes   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. Amend 2012 taxes You must spread any additional points over the life of the mortgage. Amend 2012 taxes Mortgage ending early. Amend 2012 taxes   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Amend 2012 taxes A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Amend 2012 taxes Example. Amend 2012 taxes Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Amend 2012 taxes He had deducted $1,400 of these points through 2012. Amend 2012 taxes Dan prepaid his mortgage in full in 2013. Amend 2012 taxes He can deduct the remaining $1,600 of points in 2013. Amend 2012 taxes Exception. Amend 2012 taxes   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Amend 2012 taxes Instead, deduct them over the term of the new loan. Amend 2012 taxes Form 1098. Amend 2012 taxes   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Amend 2012 taxes See Mortgage Interest Statement , later. Amend 2012 taxes Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). Amend 2012 taxes If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Amend 2012 taxes See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Amend 2012 taxes If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. Amend 2012 taxes The seller must give you this number and you must give the seller your SSN. Amend 2012 taxes Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Amend 2012 taxes Failure to meet either of these requirements may result in a $50 penalty for each failure. Amend 2012 taxes Table 1. Amend 2012 taxes Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Amend 2012 taxes IF you are eligible to deduct . Amend 2012 taxes . Amend 2012 taxes . Amend 2012 taxes THEN report the amount  on Schedule A (Form 1040) . Amend 2012 taxes . Amend 2012 taxes . Amend 2012 taxes real estate taxes line 6. Amend 2012 taxes home mortgage interest and points reported on Form 1098 line 10. Amend 2012 taxes home mortgage interest not reported on  Form 1098 line 11. Amend 2012 taxes points not reported on Form 1098 line 12. Amend 2012 taxes qualified mortgage insurance premiums line 13. Amend 2012 taxes Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. Amend 2012 taxes The statement will show the total interest paid on your mortgage during the year. Amend 2012 taxes If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. Amend 2012 taxes See Points , earlier. Amend 2012 taxes The interest you paid at settlement should be included on the statement. Amend 2012 taxes If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. Amend 2012 taxes Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Amend 2012 taxes Write “See attached” to the right of line 10. Amend 2012 taxes A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Amend 2012 taxes If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Amend 2012 taxes Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Amend 2012 taxes If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Amend 2012 taxes A copy of this form will be sent to the IRS also. Amend 2012 taxes Example. Amend 2012 taxes You bought a new home on May 3. Amend 2012 taxes You paid no points on the purchase. Amend 2012 taxes During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Amend 2012 taxes The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Amend 2012 taxes The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Amend 2012 taxes You can deduct the $5,100 if you itemize your deductions. Amend 2012 taxes Refund of overpaid interest. Amend 2012 taxes   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. Amend 2012 taxes Generally, you must include the refund in income in the year you receive it. Amend 2012 taxes See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Amend 2012 taxes More than one borrower. Amend 2012 taxes   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Amend 2012 taxes Show how much of the interest each of you paid, and give the name and address of the person who received the form. Amend 2012 taxes Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Amend 2012 taxes Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. Amend 2012 taxes Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Amend 2012 taxes Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Amend 2012 taxes Prepaid mortgage insurance premiums. Amend 2012 taxes   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. Amend 2012 taxes The premiums are treated as paid in the year to which they were allocated. Amend 2012 taxes If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Amend 2012 taxes See Publication 936 for details. Amend 2012 taxes Exception for certain mortgage insurance. Amend 2012 taxes   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Amend 2012 taxes Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. Amend 2012 taxes It also must be secured by that home. Amend 2012 taxes If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Amend 2012 taxes Home acquisition debt limit. Amend 2012 taxes   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). Amend 2012 taxes Discharges of qualified principal residence indebtedness. Amend 2012 taxes   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Amend 2012 taxes You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Amend 2012 taxes Principal residence. Amend 2012 taxes   Your principal residence is the home where you ordinarily live most of the time. Amend 2012 taxes You can have only one principal residence at any one time. Amend 2012 taxes Qualified principal residence indebtedness. Amend 2012 taxes   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Amend 2012 taxes If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. Amend 2012 taxes   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. Amend 2012 taxes Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Amend 2012 taxes Amount you can exclude. Amend 2012 taxes   You can only exclude debt discharged after 2006 and before 2014. Amend 2012 taxes The most you can exclude is $2 million ($1 million if married filing separately). Amend 2012 taxes You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. Amend 2012 taxes Ordering rule. Amend 2012 taxes   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. Amend 2012 taxes Qualified Home This means your main home or your second home. Amend 2012 taxes A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Amend 2012 taxes Main home. Amend 2012 taxes   You can have only one main home at any one time. Amend 2012 taxes This is the home where you ordinarily live most of the time. Amend 2012 taxes Second home and other special situations. Amend 2012 taxes   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. Amend 2012 taxes Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. Amend 2012 taxes See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Amend 2012 taxes If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Amend 2012 taxes Form 1098. Amend 2012 taxes   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Amend 2012 taxes See Form 1098, Mortgage Interest Statement in Publication 936. Amend 2012 taxes Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Amend 2012 taxes If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Amend 2012 taxes Who qualifies. Amend 2012 taxes   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Amend 2012 taxes Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Amend 2012 taxes The MCC will show the certificate credit rate you will use to figure your credit. Amend 2012 taxes It also will show the certified indebtedness amount. Amend 2012 taxes Only the interest on that amount qualifies for the credit. Amend 2012 taxes See Figuring the Credit , later. Amend 2012 taxes You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Amend 2012 taxes Contact your state or local housing finance agency for information about the availability of MCCs in your area. Amend 2012 taxes How to claim the credit. Amend 2012 taxes   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Amend 2012 taxes S. Amend 2012 taxes Nonresident Alien Income Tax Return. Amend 2012 taxes Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. Amend 2012 taxes Reducing your home mortgage interest deduction. Amend 2012 taxes   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Amend 2012 taxes You must do this even if part of that amount is to be carried forward to 2014. Amend 2012 taxes Selling your home. Amend 2012 taxes   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. Amend 2012 taxes For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Amend 2012 taxes Figuring the Credit Figure your credit on Form 8396. Amend 2012 taxes Mortgage not more than certified indebtedness. Amend 2012 taxes   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Amend 2012 taxes Mortgage more than certified indebtedness. Amend 2012 taxes   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Amend 2012 taxes To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Amend 2012 taxes Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. Amend 2012 taxes Example. Amend 2012 taxes Emily bought a home this year. Amend 2012 taxes Her mortgage loan is $125,000. Amend 2012 taxes The certified indebtedness amount on her MCC is $100,000. Amend 2012 taxes She paid $7,500 interest this year. Amend 2012 taxes Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Amend 2012 taxes 80)       $125,000       $7,500 x . Amend 2012 taxes 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Amend 2012 taxes In each later year, she will figure her credit using only 80% of the interest she pays for that year. Amend 2012 taxes Limits Two limits may apply to your credit. Amend 2012 taxes A limit based on the credit rate, and A limit based on your tax. Amend 2012 taxes Limit based on credit rate. Amend 2012 taxes   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Amend 2012 taxes Limit based on tax. Amend 2012 taxes   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Amend 2012 taxes See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Amend 2012 taxes Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. Amend 2012 taxes Example. Amend 2012 taxes John and his brother, George, were issued an MCC. Amend 2012 taxes They used it to get a mortgage on their main home. Amend 2012 taxes John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Amend 2012 taxes John paid $5,400 mortgage interest this year and George paid $3,600. Amend 2012 taxes The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Amend 2012 taxes The loan amount (mortgage) on their home is $120,000. Amend 2012 taxes The credit is limited to $2,000 because the credit rate is more than 20%. Amend 2012 taxes John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. Amend 2012 taxes His credit is limited to $1,200 ($2,000 × 60%). Amend 2012 taxes George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. Amend 2012 taxes His credit is limited to $800 ($2,000 × 40%). Amend 2012 taxes Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Amend 2012 taxes Example. Amend 2012 taxes You receive a mortgage credit certificate from State X. Amend 2012 taxes This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Amend 2012 taxes You claim no other credits. Amend 2012 taxes Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Amend 2012 taxes You can carry forward this amount to the next 3 years or until used, whichever comes first. Amend 2012 taxes Credit rate more than 20%. Amend 2012 taxes   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Amend 2012 taxes Example. Amend 2012 taxes In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Amend 2012 taxes The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. Amend 2012 taxes Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. Amend 2012 taxes The amount of credit you can claim on the new loan may change. Amend 2012 taxes Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Amend 2012 taxes Table 2. Amend 2012 taxes Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Amend 2012 taxes . Amend 2012 taxes . Amend 2012 taxes THEN the interest you claim on Form 8396, line 1, is* . Amend 2012 taxes . Amend 2012 taxes . Amend 2012 taxes smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Amend 2012 taxes larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Amend 2012 taxes         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. Amend 2012 taxes  See New MCC cannot increase your credit above. Amend 2012 taxes An issuer may reissue an MCC after you refinance your mortgage. Amend 2012 taxes If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. Amend 2012 taxes Year of refinancing. Amend 2012 taxes   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. Amend 2012 taxes   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Amend 2012 taxes The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. Amend 2012 taxes It must show a separate calculation for the part of the year when the new MCC was in effect. Amend 2012 taxes Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. Amend 2012 taxes New MCC cannot increase your credit. Amend 2012 taxes   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Amend 2012 taxes   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Amend 2012 taxes However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Amend 2012 taxes In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Amend 2012 taxes   There are two methods for figuring the credit you could have claimed. Amend 2012 taxes Under one method, you figure the actual credit that would have been allowed. Amend 2012 taxes This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Amend 2012 taxes   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Amend 2012 taxes Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. Amend 2012 taxes The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. Amend 2012 taxes The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Amend 2012 taxes    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. Amend 2012 taxes    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Amend 2012 taxes Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. Amend 2012 taxes While you own your home, you may add certain items to your basis. Amend 2012 taxes You may subtract certain other items from your basis. Amend 2012 taxes These items are called adjustments to basis and are explained later under Adjusted Basis . Amend 2012 taxes It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. Amend 2012 taxes You also must keep records of the events that affect basis or adjusted basis. Amend 2012 taxes See Keeping Records , below. Amend 2012 taxes Figuring Your Basis How you figure your basis depends on how you acquire your home. Amend 2012 taxes If you buy or build your home, your cost is your basis. Amend 2012 taxes If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. Amend 2012 taxes If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Amend 2012 taxes Each of these topics is discussed later. Amend 2012 taxes Property transferred from a spouse. Amend 2012 taxes   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. Amend 2012 taxes Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Amend 2012 taxes Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. Amend 2012 taxes The cost of your home includes most settlement or closing costs you paid when you bought the home. Amend 2012 taxes If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Amend 2012 taxes See Settlement or closing costs , later. Amend 2012 taxes If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. Amend 2012 taxes Purchase. Amend 2012 taxes   The basis of a home you bought is the amount you paid for it. Amend 2012 taxes This usually includes your down payment and any debt you assumed. Amend 2012 taxes The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Amend 2012 taxes This amount includes any purchase commissions or other costs of acquiring the shares. Amend 2012 taxes Construction. Amend 2012 taxes   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. Amend 2012 taxes This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. Amend 2012 taxes If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Amend 2012 taxes You cannot include in basis the value of your own labor or any other labor for which you did not pay. Amend 2012 taxes Real estate taxes. Amend 2012 taxes   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. Amend 2012 taxes See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. Amend 2012 taxes   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. Amend 2012 taxes You cannot deduct them as taxes paid. Amend 2012 taxes   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. Amend 2012 taxes Do not include those taxes in your basis. Amend 2012 taxes If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Amend 2012 taxes Example 1. Amend 2012 taxes You bought your home on September 1. Amend 2012 taxes The property tax year in your area is the calendar year, and the tax is due on August 15. Amend 2012 taxes The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. Amend 2012 taxes You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Amend 2012 taxes You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Amend 2012 taxes You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Amend 2012 taxes Example 2. Amend 2012 taxes You bought your home on May 3, 2013. Amend 2012 taxes The property tax year in your area is the calendar year. Amend 2012 taxes The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Amend 2012 taxes Under state law, the taxes become a lien on May 31. Amend 2012 taxes You agreed to pay all taxes due after the date of sale. Amend 2012 taxes The taxes due in 2013 for 2012 were $1,375. Amend 2012 taxes The taxes due in 2014 for 2013 will be $1,425. Amend 2012 taxes You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. Amend 2012 taxes Instead, you add the $1,375 to the cost (basis) of your home. Amend 2012 taxes You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. Amend 2012 taxes You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Amend 2012 taxes Settlement or closing costs. Amend 2012 taxes   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Amend 2012 taxes These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Amend 2012 taxes If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Amend 2012 taxes   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Amend 2012 taxes You deduct them in the year you buy your home if you itemize your deductions. Amend 2012 taxes You can add certain other settlement or closing costs to the basis of your home. Amend 2012 taxes Items added to basis. Amend 2012 taxes   You can include in your basis the settlement fees and closing costs you paid for buying your home. Amend 2012 taxes A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Amend 2012 taxes   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Amend 2012 taxes Abstract fees (abstract of title fees). Amend 2012 taxes Charges for installing utility services. Amend 2012 taxes Legal fees (including fees for the title search and preparation of the sales contract and deed). Amend 2012 taxes Recording fees. Amend 2012 taxes Surveys. Amend 2012 taxes Transfer or stamp taxes. Amend 2012 taxes Owner's title insurance. Amend 2012 taxes Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. Amend 2012 taxes   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. Amend 2012 taxes Items not added to basis and not deductible. Amend 2012 taxes   Here are some settlement and closing costs that you cannot deduct or add to your basis. Amend 2012 taxes Fire insurance premiums. Amend 2012 taxes Charges for using utilities or other services related to occupancy of the home before closing. Amend 2012 taxes Rent for occupying the home before closing. Amend 2012 taxes Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. Amend 2012 taxes Points paid by seller. Amend 2012 taxes   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. Amend 2012 taxes   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. Amend 2012 taxes See Points , earlier, for the rules on deducting points. Amend 2012 taxes Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. Amend 2012 taxes Fair market value. Amend 2012 taxes   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. Amend 2012 taxes Donor's adjusted basis is more than FMV. Amend 2012 taxes   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. Amend 2012 taxes Disposition basis. Amend 2012 taxes   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. Amend 2012 taxes Your basis for figuring a gain is the same as the donor's adjusted basis. Amend 2012 taxes Your basis for figuring a loss is the FMV when you received the gift. Amend 2012 taxes If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. Amend 2012 taxes However, if using the FMV results in a gain, then you neither have a gain nor a loss. Amend 2012 taxes Example 1. Amend 2012 taxes Andrew received a house as a gift from Ishmael (the donor). Amend 2012 taxes At the time of the gift, the home had an FMV of $80,000. Amend 2012 taxes Ishmael's adjusted basis was $100,000. Amend 2012 taxes After he received the house, no events occurred to increase or decrease the basis. Amend 2012 taxes If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. Amend 2012 taxes Example 2. Amend 2012 taxes Same facts as Example 1 , except this time Andrew sells the house for $70,000. Amend 2012 taxes He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. Amend 2012 taxes Example 3. Amend 2012 taxes Same facts as Example 1 , except this time Andrew sells the house for $90,000. Amend 2012 taxes Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Amend 2012 taxes Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Amend 2012 taxes So in this situation, Andrew will neither have a gain nor a loss. Amend 2012 taxes Donor's adjusted basis equal to or less than the FMV. Amend 2012 taxes   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. Amend 2012 taxes Part of federal gift tax due to net increase in value. Amend 2012 taxes   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Amend 2012 taxes The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. Amend 2012 taxes The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Amend 2012 taxes Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Amend 2012 taxes Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. Amend 2012 taxes If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Amend 2012 taxes If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. Amend 2012 taxes Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Amend 2012 taxes If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Amend 2012 taxes Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Amend 2012 taxes These events can increase or decrease your original basis. Amend 2012 taxes The result is called adjusted basis. Amend 2012 taxes See Table 3, on this page, for a list of some of the items that can adjust your basis. Amend 2012 taxes Table 3. Amend 2012 taxes Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Amend 2012 taxes It is not intended to be all-inclusive. Amend 2012 taxes Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. Amend 2012 taxes   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Amend 2012 taxes You must add the cost of any improvements to the basis of your home. Amend 2012 taxes You cannot deduct these costs. Amend 2012 taxes   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. Amend 2012 taxes Amount added to basis. Amend 2012 taxes   The amount you add to your basis for improvements is your actual cost. Amend 2012 taxes This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Amend 2012 taxes For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Amend 2012 taxes   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. Amend 2012 taxes These assessments are discussed earlier under Real Estate Taxes . Amend 2012 taxes Improvements no longer part of home. Amend 2012 taxes    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Amend 2012 taxes Example. Amend 2012 taxes You put wall-to-wall carpeting in your home 15 years ago. Amend 2012 taxes Later, you replaced that carpeting with new wall-to-wall carpeting. Amend 2012 taxes The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Amend 2012 taxes Repairs versus improvements. Amend 2012 taxes   A repair keeps your home in an ordinary, efficient operating condition. Amend 2012 taxes It does not add to the value of your home or prolong its life. Amend 2012 taxes Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Amend 2012 taxes You cannot deduct repair costs and generally cannot add them to the basis of your home. Amend 2012 taxes   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Amend 2012 taxes You add them to the basis of your home. Amend 2012 taxes Records to keep. Amend 2012 taxes   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Amend 2012 taxes Also see Keeping Records , below. Amend 2012 taxes Energy conservation subsidy. Amend 2012 taxes   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. Amend 2012 taxes You must reduce the basis of your home by that value. Amend 2012 taxes   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. Amend 2012 taxes Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. Amend 2012 taxes These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. Amend 2012 taxes You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Amend 2012 taxes In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Amend 2012 taxes How to keep records. Amend 2012 taxes   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Amend 2012 taxes How long to keep records. Amend 2012 taxes   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Amend 2012 taxes   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. Amend 2012 taxes (A period of limitations is the period of time after which no legal action can be brought. Amend 2012 taxes ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Amend 2012 taxes For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. Amend 2012 taxes Returns filed before the due date are treated as filed on the due date. Amend 2012 taxes   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Amend 2012 taxes Keep those records as long as they are important in figuring the basis of the original or replacement property. Amend 2012 taxes Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. Amend 2012 taxes Table 4. Amend 2012 taxes Record of Home Improvements Keep this for your records. Amend 2012 taxes Also, keep receipts or other proof of improvements. Amend 2012 taxes Remove from this record any improvements that are no longer part of your main home. Amend 2012 taxes For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. Amend 2012 taxes (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To