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Taxes online free Index A Alien Resident, Resident alien. Taxes online free American Institute in Taiwan, U. Taxes online free S. Taxes online free employees of, American Institute in Taiwan. Taxes online free American Samoa, possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Apprentices, treaty benefits for, Common Benefits Assistance (see Tax help) B Binational social security agreements, Bilateral Social Security (Totalization) Agreements Blocked income, Blocked Income Bona fide residence test Defined, Bona Fide Residence Test First year, Bona fide resident for part of a year. Taxes online free Last year, Bona fide resident for part of a year. Taxes online free Meeting the requirements, Publication 54 - Additional Material Qualifying for, Bona fide residence. Taxes online free , Reassignment. Taxes online free Treaty provisions, Special agreements and treaties. Taxes online free Voting by absentee ballot, Effect of voting by absentee ballot. Taxes online free Waiver of time requirements, Waiver of Time Requirements, U. Taxes online free S. Taxes online free Travel Restrictions C Camps, foreign, Foreign camps. Taxes online free Carryover of housing deduction, Carryover. Taxes online free Change of address, Reminders Choosing the exclusion, Choosing the Exclusion, When You Can Choose the Exclusion Clergy, self-employment tax on, Members of the Clergy Community income, Community income. Taxes online free Competent authority assistance, Competent Authority Assistance Contributions To foreign charitable organizations, Contributions to Foreign Charitable Organizations To IRAs, Contributions to Individual Retirement Arrangements Conventions, income tax, Purpose of Tax Treaties Credit Earned income, Earned income credit. Taxes online free , Earned income credit. Taxes online free Foreign tax, Foreign tax credit. Taxes online free , Taxes of Foreign Countries and U. Taxes online free S. Taxes online free Possessions, Deduction for Other Foreign Taxes, Common Benefits Related to excluded income, Items Related to Excluded Income Currency Foreign, Foreign Currency D Deductions Contributions to foreign charitable organizations, Contributions to Foreign Charitable Organizations Foreign taxes, Taxes of Foreign Countries and U. Taxes online free S. Taxes online free Possessions, Deduction for Other Foreign Taxes, Common Benefits, Publication 54 - Additional Material Housing, foreign, Foreign Housing Deduction IRA contributions, Contributions to Individual Retirement Arrangements Moving expenses, Moving Expenses, Forms To File Related to excluded income, Items Related to Excluded Income Reporting, How To Report Deductions Dependents Exemption for, Exemptions, Publication 54 - Additional Material Individual taxpayer identification number (ITIN), Social security number. Taxes online free Social security number, Social security number. Taxes online free Deposit of foreign currency with disbursing officer, Deposit of foreign currency with disbursing officer. Taxes online free E Earned income Foreign, Foreign Earned Income, Foreign camps. Taxes online free , Publication 54 - Additional Material Source of, Source of Earned Income Types of, Earned and Unearned Income, Storage expense reimbursements. Taxes online free Earned income credit, Earned income credit. Taxes online free , Earned income credit. Taxes online free Employer-provided amounts, Employer-provided amounts. Taxes online free Estimated tax, Estimated Tax Exclusion Foreign earned income, Foreign Earned Income Exclusion, When You Can Choose the Exclusion Housing, Foreign Housing Exclusion, Choosing the exclusion. Taxes online free Meals and lodging, Exclusion of Meals and Lodging U. Taxes online free S. Taxes online free possessions, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Exemptions Dependents, Exemptions, Publication 54 - Additional Material Spouse, Exemptions, Publication 54 - Additional Material Extensions Filing income tax return, Extensions, Return filed before test is met. Taxes online free Meeting bona fide residence or physical presence test, Extension of time to meet tests. Taxes online free F Fellowships, Scholarships and fellowships. Taxes online free Figuring estimated tax on nonconvertible foreign income, Figuring estimated tax on nonconvertible foreign currency. Taxes online free Figuring U. Taxes online free S. Taxes online free income tax, Figuring actual tax. Taxes online free Filing information Estimated tax, Estimated Tax Filing requirements, Filing Requirements Nonresident spouse treated as resident, Nonresident Alien Spouse Treated as a Resident, Foreign earned income exclusion. Taxes online free Filing requirements By filing status, Filing Requirements Foreign currency, Foreign Currency When to file and pay, When To File and Pay, Return filed before test is met. Taxes online free , Publication 54 - Additional Material Where to file, Where To File, Publication 54 - Additional Material Foreign Camps, Foreign camps. Taxes online free Country, defined, Foreign Country Currency, Foreign Currency Earned income, Foreign Earned Income, Foreign camps. Taxes online free , Publication 54 - Additional Material Household, second, Second foreign household. Taxes online free Foreign currency, deposit with disbursing officer, Deposit of foreign currency with disbursing officer. Taxes online free Foreign earned income Defined, Foreign Earned Income, More information. Taxes online free U. Taxes online free S. Taxes online free Government employees, U. Taxes online free S. Taxes online free Government Employees, More information. Taxes online free Foreign earned income exclusion Choosing, Choosing the Exclusion, When You Can Choose the Exclusion Defined, Foreign Earned Income Exclusion Earned income credit, Earned income credit. Taxes online free Foreign tax credit, Foreign tax credit or deduction. Taxes online free Income received after year earned, Paid in year following work. Taxes online free , Example. Taxes online free Limit, Limit on Excludable Amount, Physical presence test. Taxes online free , Publication 54 - Additional Material Maximum exclusion, Limit on Excludable Amount, Physical presence test. Taxes online free Part-year exclusion, Part-year exclusion. Taxes online free Physical presence test, maximum exclusion, Physical presence test. Taxes online free Requirements, Who Qualifies for the Exclusions and the Deduction?, Foreign camps. Taxes online free Revoking choice, Revoking the Exclusion Foreign housing exclusion Earned income credit, Earned income credit. Taxes online free Foreign tax credit, Foreign tax credit or deduction. Taxes online free Foreign housing exclusion/deduction Carryover of deduction, Carryover. Taxes online free Deduction, figuring, Foreign Housing Deduction Exclusion, figuring, Foreign Housing Exclusion, Choosing the exclusion. Taxes online free Housing amount, Housing Amount Housing expenses, Housing expenses. Taxes online free Married couples, Married Couples Requirements, Who Qualifies for the Exclusions and the Deduction?, Foreign camps. Taxes online free Second foreign household, Second foreign household. Taxes online free Foreign tax credit Earned income exclusion, Foreign tax credit or deduction. Taxes online free , Foreign tax credit or deduction. Taxes online free Foreign taxes Credit for, Foreign tax credit. Taxes online free , Taxes of Foreign Countries and U. Taxes online free S. Taxes online free Possessions, Deduction for Other Foreign Taxes, Common Benefits Deduction for, Taxes of Foreign Countries and U. Taxes online free S. Taxes online free Possessions, Deduction for Other Foreign Taxes, Common Benefits, Publication 54 - Additional Material Paid on excluded income, Foreign taxes paid on excluded income. Taxes online free Form 1040-ES, Estimated Tax 1040X, Return filed before test is met. Taxes online free , How To Make the Choice 1116, Credit for Foreign Income Taxes 2032, Foreign affiliate. Taxes online free 2350, How to get an extension. Taxes online free 2555, Choosing the Exclusion, Form 2555 and Form 2555-EZ, Form 2555 2555-EZ, Choosing the Exclusion, Form 2555 and Form 2555-EZ, Form 2555 3115, Blocked Income 3903, Forms To File 4361, Members of the Clergy 4563, American Samoa. Taxes online free 4868, Automatic 6-month extension. Taxes online free 673, Statement. Taxes online free 8689, Non-USVI resident with USVI income. Taxes online free 8822, Reminders W-4, Foreign tax credit. Taxes online free Free tax services, Free help with your tax return. Taxes online free Frequently asked questions (FAQs), Publication 54 - Additional Material Fulbright grant, Fulbright Grant, Publication 54 - Additional Material G General tax questions, Publication 54 - Additional Material Green card test, Resident alien. Taxes online free Guam Possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residents of, Resident of Guam. Taxes online free Where to file, Resident of Guam. Taxes online free H Help (see Tax help) Housing Amount, Housing Amount, Self-employed and employer-provided amounts. Taxes online free Deduction, Foreign Housing Exclusion and Deduction, Foreign Housing Deduction Exclusion, Foreign Housing Exclusion and Deduction, Choosing the exclusion. Taxes online free Expenses, Housing expenses. Taxes online free I Income Apprentices, treaty benefits for, Common Benefits Artist, Income of an artist. Taxes online free Blocked, Blocked Income Community, Community income. Taxes online free Corporation, Income from a corporation. Taxes online free Earned, Foreign Earned Income, Foreign camps. Taxes online free , Publication 54 - Additional Material Employer's property or facilities, use of, Use of employer's property or facilities. Taxes online free Investment, treaty benefits for, Common Benefits Partnership, Income from a sole proprietorship or partnership. Taxes online free Pensions and annuities, Pensions and annuities. Taxes online free , Common Benefits Personal service, treaty benefits for, Common Benefits Professional fees, Professional fees. Taxes online free Professors, treaty benefits for, Common Benefits Railroad retirement benefits, Publication 54 - Additional Material Reimbursement of employee expenses, Reimbursement of employee expenses. Taxes online free Reimbursement of moving expenses, Reimbursement of moving expenses. Taxes online free Rental, Rental income. Taxes online free Royalties, Royalties. Taxes online free Social security benefits, Publication 54 - Additional Material Sole proprietorship, Income from a sole proprietorship or partnership. Taxes online free Source of, Source of Earned Income Stock options, Stock options. Taxes online free Students, treaty benefits for, Common Benefits Teachers, treaty benefits for, Common Benefits Trainees, treaty benefits for, Common Benefits Unearned, Earned and Unearned Income Indefinite assignment, Temporary or Indefinite Assignment Individual retirement arrangements (IRAs), Contributions to Individual Retirement Arrangements Individual taxpayer identification number (ITIN), Social security number. Taxes online free Investment income, treaty benefits for, Common Benefits IRAs, Contributions to Individual Retirement Arrangements L Limit on Foreign housing deduction, Limit Housing expenses, Limit on housing expenses. Taxes online free Income exclusion, Limit on Excludable Amount, Physical presence test. Taxes online free Lodging, exclusion of, Exclusion of Meals and Lodging M Married couples, Married Couples Meals and lodging, exclusion of, Exclusion of Meals and Lodging Moving Allocating expenses, Allocation of Moving Expenses Deducting expenses, Moving Expenses, Forms To File Reimbursement of expenses, Reimbursement of moving expenses. Taxes online free N Nonresident spouse Social security number, Social Security Number (SSN) Treated as resident, Nonresident Alien Spouse Treated as a Resident, Foreign earned income exclusion. Taxes online free Northern Mariana Islands Possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residents of, Resident of the Commonwealth of the Northern Mariana Islands. Taxes online free Where to file, Resident of the Commonwealth of the Northern Mariana Islands. Taxes online free P Part-year exclusion, Part-year exclusion. Taxes online free Pay for personal services, Earned income. Taxes online free , Common Benefits Paying U. Taxes online free S. Taxes online free tax in foreign currency, Paying U. Taxes online free S. Taxes online free tax in foreign currency. Taxes online free Payment of tax, When To File and Pay Penalties and interest, Publication 54 - Additional Material Pensions and annuities Income from, Pensions and annuities. Taxes online free , Common Benefits Withholding from, Withholding from pension payments. Taxes online free Physical presence test 12-month period, How to figure the 12-month period. Taxes online free Defined, Physical Presence Test Maximum exclusion, Physical presence test. Taxes online free Meeting the requirements, Publication 54 - Additional Material Waiver of time requirements, Waiver of Time Requirements, U. Taxes online free S. Taxes online free Travel Restrictions Professors, treaty benefits for, Common Benefits Publications (see Tax help) Puerto Rico Possession exclusion, Puerto Rico and U. Taxes online free S. Taxes online free Virgin Islands Residents of, Puerto Rico. Taxes online free Q Questions and answers, Publication 54 - Additional Material R Railroad retirement benefits, Publication 54 - Additional Material Reimbursement Accountable plan, Accountable plan. Taxes online free Employee expenses, Reimbursement of employee expenses. Taxes online free Moving expenses, Reimbursement of moving expenses. Taxes online free Resident alien defined, Resident alien. Taxes online free Revoking choice to exclude, Revoking the Exclusion S Scholarship and fellowship grants, Publication 54 - Additional Material Scholarships, Scholarships and fellowships. Taxes online free Second foreign household, Second foreign household. Taxes online free , Married Couples Self-employment tax Clergy, Members of the Clergy Exemption from, Exemption From Social Security and Medicare Taxes How to pay, Publication 54 - Additional Material Who must pay, Who Must Pay Self-Employment Tax? Social security and Medicare taxes, Social Security and Medicare Taxes Social security benefits, Publication 54 - Additional Material Social security number Dependents, Social security number. Taxes online free Nonresident spouse, Social Security Number (SSN) Source of earned income, Source of Earned Income Spouse, exemption for, Exemptions, Publication 54 - Additional Material Students, treaty benefits for, Common Benefits Substantial presence test, Resident alien. Taxes online free T Taiwan, American Institute in, American Institute in Taiwan. Taxes online free Tax help, How To Get Tax Help Tax home, Tax Home in Foreign Country, Temporary or Indefinite Assignment Tax treaties Benefits of, Common Benefits, More information on treaties. Taxes online free Competent authority assistance, Competent Authority Assistance Determining residence, Special agreements and treaties. Taxes online free Obtaining copies of, Obtaining Copies of Tax Treaties Purpose of, Purpose of Tax Treaties Teachers, treaty benefits for, Common Benefits Temporary assignment, expenses, Temporary or Indefinite Assignment Totalization agreements, Bilateral Social Security (Totalization) Agreements Trainees, treaty benefits for, Common Benefits Travel restrictions, U. Taxes online free S. Taxes online free Travel Restrictions Treaties (see Tax treaties) TTY/TDD information, How To Get Tax Help U U. Taxes online free S. Taxes online free Government employees, U. Taxes online free S. Taxes online free Government Employees, More information. Taxes online free U. Taxes online free S. Taxes online free Virgin Islands Possession exclusion, Puerto Rico and U. Taxes online free S. Taxes online free Virgin Islands V Virgin Islands Nonresidents of, Non-USVI resident with USVI income. Taxes online free Residents of, Resident of U. Taxes online free S. Taxes online free Virgin Islands (USVI). Taxes online free Where to file, Resident of U. Taxes online free S. Taxes online free Virgin Islands (USVI). Taxes online free W Waiver of time requirements, Waiver of Time Requirements, U. Taxes online free S. Taxes online free Travel Restrictions When to file and pay, When To File and Pay, Return filed before test is met. Taxes online free , Publication 54 - Additional Material Where to file Claiming exclusion/deduction, Where To File Commonwealth of the Northern Mariana Islands residents, Resident of the Commonwealth of the Northern Mariana Islands. Taxes online free Guam residents, Resident of Guam. Taxes online free No legal residence in U. Taxes online free S. Taxes online free , Where To File Virgin Islands residents, nonresidents, Resident of U. Taxes online free S. Taxes online free Virgin Islands (USVI). Taxes online free Withholding Income tax, Income Tax Withholding , Publication 54 - Additional Material Pension payments, Withholding from pension payments. Taxes online free Prev  Up     Home   More Online Publications
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National Runaway Switchboard (NRS)

The mission of the National Runaway Switchboard (NRS) is to help keep America? runaway and at-risk youth safe and off the streets. The organization serves as the federally designated national communication system for runaway and homeless youth.

Contact the Agency or Department

Website: National Runaway Switchboard (NRS)

E-mail:

Address: 3080 N. Lincoln Ave.
Chicago, IL 60657

Phone Number: 773-880-9860

Toll-free: 1-800-786-2929 (24 hrs./7 days a week)

The Taxes Online Free

Taxes online free 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. Taxes online free S. Taxes online free Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Taxes online free If you itemize, you cannot take the standard deduction. Taxes online free This section explains what expenses you can deduct as a homeowner. Taxes online free It also points out expenses that you cannot deduct. Taxes online free There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Taxes online free Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Taxes online free Your house payment. Taxes online free   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Taxes online free Your house payment may include several costs of owning a home. Taxes online free 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. Taxes online free These are discussed in more detail later. Taxes online free   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. Taxes online free Minister's or military housing allowance. Taxes online free   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. Taxes online free You do not have to reduce your deductions by your nontaxable allowance. Taxes online free 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. Taxes online free Nondeductible payments. Taxes online free   You cannot deduct any of the following items. Taxes online free Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Taxes online free Wages you pay for domestic help. Taxes online free Depreciation. Taxes online free The cost of utilities, such as gas, electricity, or water. Taxes online free Most settlement costs. Taxes online free See Settlement or closing costs under Cost as Basis, later, for more information. Taxes online free Forfeited deposits, down payments, or earnest money. Taxes online free 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. Taxes online free 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. Taxes online free 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. Taxes online free 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). Taxes online free 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. Taxes online free Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Taxes online free This is called a real estate tax. Taxes online free You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Taxes online free 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. Taxes online free Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Taxes online free 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. Taxes online free If you own a cooperative apartment, see Special Rules for Cooperatives , later. Taxes online free Where to deduct real estate taxes. Taxes online free   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Taxes online free Real estate taxes paid at settlement or closing. Taxes online free   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. Taxes online free Your share of these taxes is fully deductible if you itemize your deductions. Taxes online free Division of real estate taxes. Taxes online free   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Taxes online free You (the buyer) are treated as paying the taxes beginning with the date of sale. Taxes online free This applies regardless of the lien dates under local law. Taxes online free Generally, this information is included on the settlement statement you get at closing. Taxes online free   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. Taxes online free You each can deduct your own share, if you itemize deductions, for the year the property is sold. Taxes online free Example. Taxes online free You bought your home on September 1. Taxes online free The property tax year (the period to which the tax relates) in your area is the calendar year. Taxes online free The tax for the year was $730 and was due and paid by the seller on August 15. Taxes online free You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). Taxes online free You figure your deduction for real estate taxes on your home as follows. Taxes online free 1. Taxes online free Enter the total real estate taxes for the real property tax year $730 2. Taxes online free Enter the number of days in the property tax year that you owned the property 122 3. Taxes online free Divide line 2 by 365 . Taxes online free 3342 4. Taxes online free Multiply line 1 by line 3. Taxes online free This is your deduction. Taxes online free 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. Taxes online free 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. Taxes online free Delinquent taxes. Taxes online free   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Taxes online free If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Taxes online free You treat them as part of the cost of your home. Taxes online free See Real estate taxes , later, under Basis. Taxes online free Escrow accounts. Taxes online free   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Taxes online free You may not be able to deduct the total you pay into the escrow account. Taxes online free You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Taxes online free Your real estate tax bill will show this amount. Taxes online free Refund or rebate of real estate taxes. Taxes online free   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. Taxes online free 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. Taxes online free For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Taxes online free Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Taxes online free Charges for services. Taxes online free   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Taxes online free 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). Taxes online free    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. Taxes online free If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Taxes online free Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Taxes online free Assessments for local benefits. Taxes online free   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Taxes online free Local benefits include the construction of streets, sidewalks, or water and sewer systems. Taxes online free You must add these amounts to the basis of your property. Taxes online free   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Taxes online free An example is a charge to repair an existing sidewalk and any interest included in that charge. Taxes online free   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. Taxes online free If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Taxes online free   An assessment for a local benefit may be listed as an item in your real estate tax bill. Taxes online free If so, use the rules in this section to find how much of it, if any, you can deduct. Taxes online free Transfer taxes (or stamp taxes). Taxes online free   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Taxes online free If you are the buyer and you pay them, include them in the cost basis of the property. Taxes online free If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Taxes online free Homeowners association assessments. Taxes online free   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Taxes online free 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. Taxes online free As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Taxes online free 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. Taxes online free For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Taxes online free 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. Taxes online free 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. Taxes online free Tenant-stockholders. Taxes online free   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Taxes online free The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Taxes online free The units that the tenant-stockholder has the right to occupy can be rented to others. Taxes online free Deductible taxes. Taxes online free   You figure your share of real estate taxes in the following way. Taxes online free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Taxes online free Multiply the corporation's deductible real estate taxes by the number you figured in (1). Taxes online free This is your share of the real estate taxes. Taxes online free   Generally, the corporation will tell you your share of its real estate tax. Taxes online free This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Taxes online free Refund of real estate taxes. Taxes online free   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. Taxes online free Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Taxes online free 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). Taxes online free 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. Taxes online free For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). Taxes online free 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. Taxes online free 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. Taxes online free Most home buyers take out a mortgage (loan) to buy their home. Taxes online free They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Taxes online free 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). Taxes online free 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. Taxes online free If either of these situations applies to you, see Publication 936 for more information. Taxes online free Also see Publication 936 if you later refinance your mortgage or buy a second home. Taxes online free Refund of home mortgage interest. Taxes online free   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. Taxes online free For more information, see Recoveries in Publication 525. Taxes online free The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Taxes online free See Mortgage Interest Statement , later. Taxes online free Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Taxes online free The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Taxes online free Prepaid interest. Taxes online free   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. Taxes online free Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Taxes online free An exception (discussed later) applies to points. Taxes online free Late payment charge on mortgage payment. Taxes online free   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. Taxes online free Mortgage prepayment penalty. Taxes online free   If you pay off your home mortgage early, you may have to pay a penalty. Taxes online free 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. Taxes online free Ground rent. Taxes online free   In some states (such as Maryland), you may buy your home subject to a ground rent. Taxes online free A ground rent is an obligation you assume to pay a fixed amount per year on the property. Taxes online free Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Taxes online free Redeemable ground rents. Taxes online free   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Taxes online free The ground rent is a redeemable ground rent only if all of the following are true. Taxes online free Your lease, including renewal periods, is for more than 15 years. Taxes online free You can freely assign the lease. Taxes online free 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. Taxes online free The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Taxes online free   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Taxes online free You cannot deduct them. Taxes online free Nonredeemable ground rents. Taxes online free   Payments on a nonredeemable ground rent are not mortgage interest. Taxes online free You can deduct them as rent only if they are a business expense or if they are for rental property. Taxes online free Cooperative apartment. Taxes online free   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 . Taxes online free In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Taxes online free 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. Taxes online free For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. Taxes online free Refund of cooperative's mortgage interest. Taxes online free   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Taxes online free The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Taxes online free   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Taxes online free Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Taxes online free You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Taxes online free This amount should be included in the mortgage interest statement provided by your lender. Taxes online free See the discussion under Mortgage Interest Statement , later. Taxes online free Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Taxes online free Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Taxes online free Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Taxes online free A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Taxes online free See Points paid by the seller , later. Taxes online free General rule. Taxes online free   You cannot deduct the full amount of points in the year paid. Taxes online free They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. Taxes online free Exception. Taxes online free   You can deduct the full amount of points in the year paid if you meet all the following tests. Taxes online free Your loan is secured by your main home. Taxes online free (Generally, your main home is the one you live in most of the time. Taxes online free ) Paying points is an established business practice in the area where the loan was made. Taxes online free The points paid were not more than the points generally charged in that area. Taxes online free You use the cash method of accounting. Taxes online free This means you report income in the year you receive it and deduct expenses in the year you pay them. Taxes online free Most individuals use this method. Taxes online free 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. Taxes online free The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Taxes online free The funds you provided are not required to have been applied to the points. Taxes online free They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Taxes online free You cannot have borrowed these funds. Taxes online free You use your loan to buy or build your main home. Taxes online free The points were computed as a percentage of the principal amount of the mortgage. Taxes online free The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. Taxes online free The points may be shown as paid from either your funds or the seller's. Taxes online free Note. Taxes online free 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. Taxes online free 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. Taxes online free Home improvement loan. Taxes online free   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. Taxes online free Refinanced loan. Taxes online free   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. Taxes online free You can deduct the rest of the points over the life of the loan. Taxes online free Points not fully deductible in year paid. Taxes online free    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. Taxes online free Figure A. Taxes online free   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Taxes online free    Please click here for the text description of the image. Taxes online free Figure A. Taxes online free Are my points fully deductible this year? Amounts charged for services. Taxes online free   Amounts charged by the lender for specific services connected to the loan are not interest. Taxes online free Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Taxes online free You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Taxes online free For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Taxes online free Points paid by the seller. Taxes online free   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Taxes online free Treatment by seller. Taxes online free   The seller cannot deduct these fees as interest. Taxes online free However, they are a selling expense that reduces the seller's amount realized. Taxes online free See Publication 523 for more information. Taxes online free Treatment by buyer. Taxes online free   The buyer treats seller-paid points as if he or she had paid them. Taxes online free If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Taxes online free If any of those tests are not met, the buyer must deduct the points over the life of the loan. Taxes online free   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Taxes online free For more information about the basis of your home, see Basis , later. Taxes online free Funds provided are less than points. Taxes online free   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. Taxes online free In addition, you can deduct any points paid by the seller. Taxes online free Example 1. Taxes online free When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Taxes online free 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. Taxes online free Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Taxes online free You spread the remaining $250 over the life of the mortgage. Taxes online free Example 2. Taxes online free 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. Taxes online free In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Taxes online free You spread the remaining $250 over the life of the mortgage. Taxes online free You must reduce the basis of your home by the $1,000 paid by the seller. Taxes online free Excess points. Taxes online free   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. Taxes online free You must spread any additional points over the life of the mortgage. Taxes online free Mortgage ending early. Taxes online free   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. Taxes online free A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Taxes online free Example. Taxes online free Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Taxes online free He had deducted $1,400 of these points through 2012. Taxes online free Dan prepaid his mortgage in full in 2013. Taxes online free He can deduct the remaining $1,600 of points in 2013. Taxes online free Exception. Taxes online free   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Taxes online free Instead, deduct them over the term of the new loan. Taxes online free Form 1098. Taxes online free   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. Taxes online free See Mortgage Interest Statement , later. Taxes online free 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). Taxes online free If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Taxes online free See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Taxes online free 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. Taxes online free The seller must give you this number and you must give the seller your SSN. Taxes online free Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Taxes online free Failure to meet either of these requirements may result in a $50 penalty for each failure. Taxes online free Table 1. Taxes online free Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Taxes online free IF you are eligible to deduct . Taxes online free . Taxes online free . Taxes online free THEN report the amount  on Schedule A (Form 1040) . Taxes online free . Taxes online free . Taxes online free real estate taxes line 6. Taxes online free home mortgage interest and points reported on Form 1098 line 10. Taxes online free home mortgage interest not reported on  Form 1098 line 11. Taxes online free points not reported on Form 1098 line 12. Taxes online free qualified mortgage insurance premiums line 13. Taxes online free 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. Taxes online free The statement will show the total interest paid on your mortgage during the year. Taxes online free 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. Taxes online free See Points , earlier. Taxes online free The interest you paid at settlement should be included on the statement. Taxes online free 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. Taxes online free Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Taxes online free Write “See attached” to the right of line 10. Taxes online free A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Taxes online free If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Taxes online free Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Taxes online free If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Taxes online free A copy of this form will be sent to the IRS also. Taxes online free Example. Taxes online free You bought a new home on May 3. Taxes online free You paid no points on the purchase. Taxes online free During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Taxes online free The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Taxes online free The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Taxes online free You can deduct the $5,100 if you itemize your deductions. Taxes online free Refund of overpaid interest. Taxes online free   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. Taxes online free Generally, you must include the refund in income in the year you receive it. Taxes online free See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Taxes online free More than one borrower. Taxes online free   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. Taxes online free Show how much of the interest each of you paid, and give the name and address of the person who received the form. Taxes online free Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Taxes online free 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. Taxes online free Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Taxes online free 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). Taxes online free Prepaid mortgage insurance premiums. Taxes online free   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. Taxes online free The premiums are treated as paid in the year to which they were allocated. Taxes online free If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Taxes online free See Publication 936 for details. Taxes online free Exception for certain mortgage insurance. Taxes online free   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Taxes online free 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. Taxes online free It also must be secured by that home. Taxes online free 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. Taxes online free Home acquisition debt limit. Taxes online free   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). Taxes online free Discharges of qualified principal residence indebtedness. Taxes online free   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Taxes online free You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Taxes online free Principal residence. Taxes online free   Your principal residence is the home where you ordinarily live most of the time. Taxes online free You can have only one principal residence at any one time. Taxes online free Qualified principal residence indebtedness. Taxes online free   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Taxes online free 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. Taxes online free   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. Taxes online free Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Taxes online free Amount you can exclude. Taxes online free   You can only exclude debt discharged after 2006 and before 2014. Taxes online free The most you can exclude is $2 million ($1 million if married filing separately). Taxes online free 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. Taxes online free Ordering rule. Taxes online free   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. Taxes online free Qualified Home This means your main home or your second home. Taxes online free A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Taxes online free Main home. Taxes online free   You can have only one main home at any one time. Taxes online free This is the home where you ordinarily live most of the time. Taxes online free Second home and other special situations. Taxes online free   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. Taxes online free 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. Taxes online free 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. Taxes online free If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Taxes online free Form 1098. Taxes online free   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Taxes online free See Form 1098, Mortgage Interest Statement in Publication 936. Taxes online free Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Taxes online free If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Taxes online free Who qualifies. Taxes online free   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Taxes online free Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Taxes online free The MCC will show the certificate credit rate you will use to figure your credit. Taxes online free It also will show the certified indebtedness amount. Taxes online free Only the interest on that amount qualifies for the credit. Taxes online free See Figuring the Credit , later. Taxes online free You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Taxes online free Contact your state or local housing finance agency for information about the availability of MCCs in your area. Taxes online free How to claim the credit. Taxes online free   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Taxes online free S. Taxes online free Nonresident Alien Income Tax Return. Taxes online free 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. Taxes online free Reducing your home mortgage interest deduction. Taxes online free   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. Taxes online free You must do this even if part of that amount is to be carried forward to 2014. Taxes online free Selling your home. Taxes online free   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. Taxes online free For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Taxes online free Figuring the Credit Figure your credit on Form 8396. Taxes online free Mortgage not more than certified indebtedness. Taxes online free   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. Taxes online free Mortgage more than certified indebtedness. Taxes online free   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. Taxes online free 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. Taxes online free 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. Taxes online free Example. Taxes online free Emily bought a home this year. Taxes online free Her mortgage loan is $125,000. Taxes online free The certified indebtedness amount on her MCC is $100,000. Taxes online free She paid $7,500 interest this year. Taxes online free Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Taxes online free 80)       $125,000       $7,500 x . Taxes online free 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Taxes online free In each later year, she will figure her credit using only 80% of the interest she pays for that year. Taxes online free Limits Two limits may apply to your credit. Taxes online free A limit based on the credit rate, and A limit based on your tax. Taxes online free Limit based on credit rate. Taxes online free   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Taxes online free Limit based on tax. Taxes online free   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Taxes online free See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Taxes online free 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. Taxes online free Example. Taxes online free John and his brother, George, were issued an MCC. Taxes online free They used it to get a mortgage on their main home. Taxes online free John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Taxes online free John paid $5,400 mortgage interest this year and George paid $3,600. Taxes online free The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Taxes online free The loan amount (mortgage) on their home is $120,000. Taxes online free The credit is limited to $2,000 because the credit rate is more than 20%. Taxes online free 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. Taxes online free His credit is limited to $1,200 ($2,000 × 60%). Taxes online free 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. Taxes online free His credit is limited to $800 ($2,000 × 40%). Taxes online free 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. Taxes online free Example. Taxes online free You receive a mortgage credit certificate from State X. Taxes online free This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Taxes online free You claim no other credits. Taxes online free Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Taxes online free You can carry forward this amount to the next 3 years or until used, whichever comes first. Taxes online free Credit rate more than 20%. Taxes online free   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). Taxes online free Example. Taxes online free In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Taxes online free 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. Taxes online free 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. Taxes online free The amount of credit you can claim on the new loan may change. Taxes online free Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Taxes online free Table 2. Taxes online free Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Taxes online free . Taxes online free . Taxes online free THEN the interest you claim on Form 8396, line 1, is* . Taxes online free . Taxes online free . Taxes online free smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Taxes online free larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Taxes online free         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. Taxes online free  See New MCC cannot increase your credit above. Taxes online free An issuer may reissue an MCC after you refinance your mortgage. Taxes online free 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. Taxes online free Year of refinancing. Taxes online free   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. Taxes online free   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Taxes online free 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. Taxes online free It must show a separate calculation for the part of the year when the new MCC was in effect. Taxes online free 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. Taxes online free New MCC cannot increase your credit. Taxes online free   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Taxes online free   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Taxes online free However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Taxes online free In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Taxes online free   There are two methods for figuring the credit you could have claimed. Taxes online free Under one method, you figure the actual credit that would have been allowed. Taxes online free This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Taxes online free   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Taxes online free 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. Taxes online free 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. Taxes online free The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Taxes online free    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. Taxes online free    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Taxes online free 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. Taxes online free While you own your home, you may add certain items to your basis. Taxes online free You may subtract certain other items from your basis. Taxes online free These items are called adjustments to basis and are explained later under Adjusted Basis . Taxes online free 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. Taxes online free You also must keep records of the events that affect basis or adjusted basis. Taxes online free See Keeping Records , below. Taxes online free Figuring Your Basis How you figure your basis depends on how you acquire your home. Taxes online free If you buy or build your home, your cost is your basis. Taxes online free 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. Taxes online free If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Taxes online free Each of these topics is discussed later. Taxes online free Property transferred from a spouse. Taxes online free   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. Taxes online free Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Taxes online free 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. Taxes online free The cost of your home includes most settlement or closing costs you paid when you bought the home. Taxes online free If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Taxes online free See Settlement or closing costs , later. Taxes online free 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. Taxes online free Purchase. Taxes online free   The basis of a home you bought is the amount you paid for it. Taxes online free This usually includes your down payment and any debt you assumed. Taxes online free The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Taxes online free This amount includes any purchase commissions or other costs of acquiring the shares. Taxes online free Construction. Taxes online free   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. Taxes online free 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. Taxes online free If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Taxes online free You cannot include in basis the value of your own labor or any other labor for which you did not pay. Taxes online free Real estate taxes. Taxes online free   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. Taxes online free 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. Taxes online free   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. Taxes online free You cannot deduct them as taxes paid. Taxes online free   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. Taxes online free Do not include those taxes in your basis. Taxes online free If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Taxes online free Example 1. Taxes online free You bought your home on September 1. Taxes online free The property tax year in your area is the calendar year, and the tax is due on August 15. Taxes online free 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. Taxes online free You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Taxes online free You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Taxes online free You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Taxes online free Example 2. Taxes online free You bought your home on May 3, 2013. Taxes online free The property tax year in your area is the calendar year. Taxes online free The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Taxes online free Under state law, the taxes become a lien on May 31. Taxes online free You agreed to pay all taxes due after the date of sale. Taxes online free The taxes due in 2013 for 2012 were $1,375. Taxes online free The taxes due in 2014 for 2013 will be $1,425. Taxes online free 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. Taxes online free Instead, you add the $1,375 to the cost (basis) of your home. Taxes online free 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. Taxes online free You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Taxes online free Settlement or closing costs. Taxes online free   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Taxes online free These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Taxes online free If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Taxes online free   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Taxes online free You deduct them in the year you buy your home if you itemize your deductions. Taxes online free You can add certain other settlement or closing costs to the basis of your home. Taxes online free Items added to basis. Taxes online free   You can include in your basis the settlement fees and closing costs you paid for buying your home. Taxes online free A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Taxes online free   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Taxes online free Abstract fees (abstract of title fees). Taxes online free Charges for installing utility services. Taxes online free Legal fees (including fees for the title search and preparation of the sales contract and deed). Taxes online free Recording fees. Taxes online free Surveys. Taxes online free Transfer or stamp taxes. Taxes online free Owner's title insurance. Taxes online free 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. Taxes online free   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. Taxes online free Items not added to basis and not deductible. Taxes online free   Here are some settlement and closing costs that you cannot deduct or add to your basis. Taxes online free Fire insurance premiums. Taxes online free Charges for using utilities or other services related to occupancy of the home before closing. Taxes online free Rent for occupying the home before closing. Taxes online free 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. Taxes online free Points paid by seller. Taxes online free   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. Taxes online free   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. Taxes online free See Points , earlier, for the rules on deducting points. Taxes online free 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. Taxes online free Fair market value. Taxes online free   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. Taxes online free Donor's adjusted basis is more than FMV. Taxes online free   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. Taxes online free Disposition basis. Taxes online free   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. Taxes online free Your basis for figuring a gain is the same as the donor's adjusted basis. Taxes online free Your basis for figuring a loss is the FMV when you received the gift. Taxes online free 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. Taxes online free However, if using the FMV results in a gain, then you neither have a gain nor a loss. Taxes online free Example 1. Taxes online free Andrew received a house as a gift from Ishmael (the donor). Taxes online free At the time of the gift, the home had an FMV of $80,000. Taxes online free Ishmael's adjusted basis was $100,000. Taxes online free After he received the house, no events occurred to increase or decrease the basis. Taxes online free 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. Taxes online free Example 2. Taxes online free Same facts as Example 1 , except this time Andrew sells the house for $70,000. Taxes online free 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. Taxes online free Example 3. Taxes online free Same facts as Example 1 , except this time Andrew sells the house for $90,000. Taxes online free Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Taxes online free Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Taxes online free So in this situation, Andrew will neither have a gain nor a loss. Taxes online free Donor's adjusted basis equal to or less than the FMV. Taxes online free   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. Taxes online free Part of federal gift tax due to net increase in value. Taxes online free   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. Taxes online free 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. Taxes online free The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Taxes online free Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Taxes online free 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. Taxes online free If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Taxes online free 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. Taxes online free Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Taxes online free 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. Taxes online free Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Taxes online free These events can increase or decrease your original basis. Taxes online free The result is called adjusted basis. Taxes online free See Table 3, on this page, for a list of some of the items that can adjust your basis. Taxes online free Table 3. Taxes online free Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Taxes online free It is not intended to be all-inclusive. Taxes online free 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. Taxes online free   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Taxes online free You must add the cost of any improvements to the basis of your home. Taxes online free You cannot deduct these costs. Taxes online free   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. Taxes online free Amount added to basis. Taxes online free   The amount you add to your basis for improvements is your actual cost. Taxes online free This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Taxes online free 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. Taxes online free   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. Taxes online free These assessments are discussed earlier under Real Estate Taxes . Taxes online free Improvements no longer part of home. Taxes online free    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Taxes online free Example. Taxes online free You put wall-to-wall carpeting in your home 15 years ago. Taxes online free Later, you replaced that carpeting with new wall-to-wall carpeting. Taxes online free The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Taxes online free Repairs versus improvements. Taxes online free   A repair keeps your home in an ordinary, efficient operating condition. Taxes online free It does not add to the value of your home or prolong its life. Taxes online free Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Taxes online free You cannot deduct repair costs and generally cannot add them to the basis of your home. Taxes online free   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Taxes online free You add them to the basis of your home. Taxes online free Records to keep. Taxes online free   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Taxes online free Also see Keeping Records , below. Taxes online free Energy conservation subsidy. Taxes online free   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. Taxes online free You must reduce the basis of your home by that value. Taxes online free   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. Taxes online free 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. Taxes online free 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. Taxes online free You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Taxes online free In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Taxes online free How to keep records. Taxes online free   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Taxes online free How long to keep records. Taxes online free   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Taxes online free   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. Taxes online free (A period of limitations is the period of time after which no legal action can be brought. Taxes online free ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Taxes online free 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. Taxes online free Returns filed before the due date are treated as filed on the due date. Taxes online free   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Taxes online free Keep those records as long as they are important in figuring the basis of the original or replacement property. Taxes online free 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. Taxes online free Table 4. Taxes online free Record of Home Improvements Keep this for your records. Taxes online free Also, keep receipts or other proof of improvements. Taxes online free Remove from this record any improvements that are no longer part of your main home. Taxes online free 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. Taxes online free (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