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Can I File My 2011 Taxes On Turbotax

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Can I File My 2011 Taxes On Turbotax

Can i file my 2011 taxes on turbotax Car Expenses Table of Contents Introduction Depreciation of CarSpecial Depreciation Allowance Depreciation Limit Amended Return Election Not To Claim Special Allowance If you purchased a car after September 10, 2001, for use in your business (or as an employee) and figure your deductible expenses using the actual car expense method, new law contains provisions that may affect your depreciation deduction for that car. Can i file my 2011 taxes on turbotax Publication 463, Travel, Entertainment, Gift, and Car Expenses, contains information on figuring depreciation on your car. Can i file my 2011 taxes on turbotax However, Publication 463 does not contain the new provisions because it was printed before the law was enacted. Can i file my 2011 taxes on turbotax The new provisions are in the Supplement to Publication 463, which is reprinted below. Can i file my 2011 taxes on turbotax Supplement to Publication 463 Travel, Entertainment, Gift, and Car Expenses   Introduction This supplemental publication is for taxpayers who purchased a car for business purposes after September 10, 2001, and figure their deductible expenses, including a deduction for depreciation, using the actual car expense method. Can i file my 2011 taxes on turbotax After Publication 463 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Can i file my 2011 taxes on turbotax Certain provisions of this new law may reduce your taxes for 2001. Can i file my 2011 taxes on turbotax The new law contains the following provisions. Can i file my 2011 taxes on turbotax A new depreciation deduction, the special depreciation allowance. Can i file my 2011 taxes on turbotax An increase in the limit on depreciation for any car for which you claim the new special depreciation allowance. Can i file my 2011 taxes on turbotax If you have already filed your 2001 return, you may wish to file an amended return to claim any of these benefits. Can i file my 2011 taxes on turbotax See Amended Return, later. Can i file my 2011 taxes on turbotax Depreciation of Car If you used the actual car expense method to figure your deduction for a car you own and use in your business (or as an employee), you generally can claim a depreciation deduction. Can i file my 2011 taxes on turbotax However, there is a limit on the depreciation deduction you can take for your car each year. Can i file my 2011 taxes on turbotax See Depreciation Limit later. Can i file my 2011 taxes on turbotax Special Depreciation Allowance The new law allows you to claim a special depreciation allowance. Can i file my 2011 taxes on turbotax This special allowance is a deduction equal to 30% of the depreciable basis of qualified property. Can i file my 2011 taxes on turbotax You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS). Can i file my 2011 taxes on turbotax See Depreciation Deduction under Actual Car Expenses in chapter 4 of Publication 463 for information about MACRS. Can i file my 2011 taxes on turbotax You can claim the special depreciation allowance only for the year the qualified property is placed in service. Can i file my 2011 taxes on turbotax Qualified property. Can i file my 2011 taxes on turbotax   Qualified property includes a car (any four-wheeled vehicle, including a truck or van not more than 6,000 pounds, that is made primarily for use on public streets, roads, and highways) that meets all of the following requirements. Can i file my 2011 taxes on turbotax You bought it new. Can i file my 2011 taxes on turbotax You bought it after September 10, 2001. Can i file my 2011 taxes on turbotax (But a car is not qualified property if a binding written contract for you to buy the car was in effect before September 11, 2001. Can i file my 2011 taxes on turbotax ) You began using it for business after September 10, 2001, and used it more than 50% in a qualified business use. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax Bob bought a new car on October 15, 2001, for $20,000 and placed it in service immediately, using it 75% for business. Can i file my 2011 taxes on turbotax Bob's car is qualified property. Can i file my 2011 taxes on turbotax Bob chooses not to take a section 179 deduction for the car. Can i file my 2011 taxes on turbotax He does claim the new special depreciation allowance. Can i file my 2011 taxes on turbotax Bob first must figure the car's depreciable basis, which is $15,000 ($20,000 × . Can i file my 2011 taxes on turbotax 75). Can i file my 2011 taxes on turbotax He then figures the special depreciation allowance of $4,500 ($15,000 × . Can i file my 2011 taxes on turbotax 30). Can i file my 2011 taxes on turbotax The remaining depreciable basis of $10,500 ($15,000 - $4,500) is depreciated using MACRS (200% declining balance method, half-year convention) and results in a deduction of $2,100 ($10,500 × . Can i file my 2011 taxes on turbotax 20), for a total depreciation deduction for 2001 of $6,600 ($4,500 + $2,100). Can i file my 2011 taxes on turbotax However, Bob's depreciation deduction is limited to $5,745 ($7,660 × . Can i file my 2011 taxes on turbotax 75), as discussed next. Can i file my 2011 taxes on turbotax Depreciation Limit The limit on your depreciation deduction for 2001 is increased to $7,660 for a car that is qualified property (defined above) and for which you claim the special depreciation allowance. Can i file my 2011 taxes on turbotax The limit is increased to $23,080 if the car is an electric car. Can i file my 2011 taxes on turbotax The section 179 deduction is treated as depreciation for purposes of this limit. Can i file my 2011 taxes on turbotax If you use a car less than 100% in your business or work, the limit is $7,660 (or $23,080 for an electric car) multiplied by the percentage of business and investment use during the year. Can i file my 2011 taxes on turbotax For cars that do not qualify for (or for which you choose not to claim) the special depreciation allowance, the limit remains $3,060 ($9,280 for electric cars). Can i file my 2011 taxes on turbotax Amended Return If you filed your 2001 calendar year return before June 1, 2002, and did not claim the new special depreciation allowance for a qualified car, you can claim it by filing an amended return on Form 1040X, Amended U. Can i file my 2011 taxes on turbotax S. Can i file my 2011 taxes on turbotax Individual Income Tax Return, by April 15, 2003. Can i file my 2011 taxes on turbotax At the top of the Form 1040X, print “Filed pursuant to Revenue Procedure 2002–33. Can i file my 2011 taxes on turbotax ” If you are an employee, attach Form 2106, Employee Business Expenses (revised March 2002). Can i file my 2011 taxes on turbotax If you are self-employed, attach Form 4562, Depreciation and Amortization (revised March 2002). Can i file my 2011 taxes on turbotax Or, you can claim the special depreciation allowance by filing Form 3115, Application for Change in Accounting Method, with your 2002 return. Can i file my 2011 taxes on turbotax For details, see Revenue Procedure 2002–33. Can i file my 2011 taxes on turbotax (But, filing Form 1040X for 2001 enables you to claim the special allowance earlier than attaching Form 3115 to your 2002 return. Can i file my 2011 taxes on turbotax ) You cannot claim the special depreciation allowance on an amended return (or by using Form 3115) if you made, or are treated as having made, the election not to claim it described later. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax The facts are the same as in the previous example except that Bob filed his original 2001 income tax return on April 15, 2002, and claimed a $3,000 ($20,000 x . Can i file my 2011 taxes on turbotax 75 x . Can i file my 2011 taxes on turbotax 20) depreciation deduction for his new car using MACRS. Can i file my 2011 taxes on turbotax Bob now wishes to claim the special depreciation allowance for his new car on an amended 2001 return. Can i file my 2011 taxes on turbotax Bob, who is an employee, files Form 1040X, by April 15, 2003, with an updated Form 2106 (revised March 2002) attached, increasing his total depreciation deduction to $5,745, as figured in the earlier example. Can i file my 2011 taxes on turbotax Bob's new filled-in Form 2106 is shown later. Can i file my 2011 taxes on turbotax Election Not To Claim Special Allowance You can elect not to claim the special depreciation allowance for a car by making a statement attached to, or written on, your return indicating that you are electing not to claim the special depreciation allowance for 5-year property. Can i file my 2011 taxes on turbotax As a general rule, you must make this election by the due date (including extensions) of your return. Can i file my 2011 taxes on turbotax You can have an automatic extension of 6 months from the due date of your return (excluding extensions) to make the election with an amended return. Can i file my 2011 taxes on turbotax To get this extension, you must have filed your original return by the due date (including extensions). Can i file my 2011 taxes on turbotax At the top of the statement, print “Filed pursuant to section 301. Can i file my 2011 taxes on turbotax 9100–2. Can i file my 2011 taxes on turbotax ” If you elect not to claim the special depreciation allowance for a car, you cannot claim it for any other 5-year property placed in service during the same year. Can i file my 2011 taxes on turbotax Unless you elect (or are treated as electing) not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. Can i file my 2011 taxes on turbotax Deemed election for return filed before June 1, 2002. Can i file my 2011 taxes on turbotax   If you did not make the election not to claim the special depreciation allowance in the time and manner described above, you will still be treated as electing not to claim it if all of the following apply. Can i file my 2011 taxes on turbotax You filed your 2001 return before June 1, 2002. Can i file my 2011 taxes on turbotax You claimed depreciation on your return but did not claim the special depreciation allowance. Can i file my 2011 taxes on turbotax You did not file an amended 2001 return by April 15, 2003, or a Form 3115 with your 2002 return, to claim the special depreciation allowance. Can i file my 2011 taxes on turbotax Form 2106, Page 1, for Bob Smith Form 2106, Page 2, for Bob Smith Prev  Up  Next   Home   More Online Publications
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Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax S. Can i file my 2011 taxes on turbotax Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Can i file my 2011 taxes on turbotax If you itemize, you cannot take the standard deduction. Can i file my 2011 taxes on turbotax This section explains what expenses you can deduct as a homeowner. Can i file my 2011 taxes on turbotax It also points out expenses that you cannot deduct. Can i file my 2011 taxes on turbotax There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Can i file my 2011 taxes on turbotax Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Can i file my 2011 taxes on turbotax Your house payment. Can i file my 2011 taxes on turbotax   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Can i file my 2011 taxes on turbotax Your house payment may include several costs of owning a home. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax These are discussed in more detail later. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Minister's or military housing allowance. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You do not have to reduce your deductions by your nontaxable allowance. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Nondeductible payments. Can i file my 2011 taxes on turbotax   You cannot deduct any of the following items. Can i file my 2011 taxes on turbotax Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Can i file my 2011 taxes on turbotax Wages you pay for domestic help. Can i file my 2011 taxes on turbotax Depreciation. Can i file my 2011 taxes on turbotax The cost of utilities, such as gas, electricity, or water. Can i file my 2011 taxes on turbotax Most settlement costs. Can i file my 2011 taxes on turbotax See Settlement or closing costs under Cost as Basis, later, for more information. Can i file my 2011 taxes on turbotax Forfeited deposits, down payments, or earnest money. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Can i file my 2011 taxes on turbotax This is called a real estate tax. Can i file my 2011 taxes on turbotax You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If you own a cooperative apartment, see Special Rules for Cooperatives , later. Can i file my 2011 taxes on turbotax Where to deduct real estate taxes. Can i file my 2011 taxes on turbotax   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Can i file my 2011 taxes on turbotax Real estate taxes paid at settlement or closing. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Your share of these taxes is fully deductible if you itemize your deductions. Can i file my 2011 taxes on turbotax Division of real estate taxes. Can i file my 2011 taxes on turbotax   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Can i file my 2011 taxes on turbotax You (the buyer) are treated as paying the taxes beginning with the date of sale. Can i file my 2011 taxes on turbotax This applies regardless of the lien dates under local law. Can i file my 2011 taxes on turbotax Generally, this information is included on the settlement statement you get at closing. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You each can deduct your own share, if you itemize deductions, for the year the property is sold. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax You bought your home on September 1. Can i file my 2011 taxes on turbotax The property tax year (the period to which the tax relates) in your area is the calendar year. Can i file my 2011 taxes on turbotax The tax for the year was $730 and was due and paid by the seller on August 15. Can i file my 2011 taxes on turbotax You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). Can i file my 2011 taxes on turbotax You figure your deduction for real estate taxes on your home as follows. Can i file my 2011 taxes on turbotax 1. Can i file my 2011 taxes on turbotax Enter the total real estate taxes for the real property tax year $730 2. Can i file my 2011 taxes on turbotax Enter the number of days in the property tax year that you owned the property 122 3. Can i file my 2011 taxes on turbotax Divide line 2 by 365 . Can i file my 2011 taxes on turbotax 3342 4. Can i file my 2011 taxes on turbotax Multiply line 1 by line 3. Can i file my 2011 taxes on turbotax This is your deduction. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Delinquent taxes. Can i file my 2011 taxes on turbotax   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Can i file my 2011 taxes on turbotax If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Can i file my 2011 taxes on turbotax You treat them as part of the cost of your home. Can i file my 2011 taxes on turbotax See Real estate taxes , later, under Basis. Can i file my 2011 taxes on turbotax Escrow accounts. Can i file my 2011 taxes on turbotax   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Can i file my 2011 taxes on turbotax You may not be able to deduct the total you pay into the escrow account. Can i file my 2011 taxes on turbotax You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Can i file my 2011 taxes on turbotax Your real estate tax bill will show this amount. Can i file my 2011 taxes on turbotax Refund or rebate of real estate taxes. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Can i file my 2011 taxes on turbotax Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Can i file my 2011 taxes on turbotax Charges for services. Can i file my 2011 taxes on turbotax   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax    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. Can i file my 2011 taxes on turbotax If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Can i file my 2011 taxes on turbotax Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Can i file my 2011 taxes on turbotax Assessments for local benefits. Can i file my 2011 taxes on turbotax   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Can i file my 2011 taxes on turbotax Local benefits include the construction of streets, sidewalks, or water and sewer systems. Can i file my 2011 taxes on turbotax You must add these amounts to the basis of your property. Can i file my 2011 taxes on turbotax   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Can i file my 2011 taxes on turbotax An example is a charge to repair an existing sidewalk and any interest included in that charge. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Can i file my 2011 taxes on turbotax   An assessment for a local benefit may be listed as an item in your real estate tax bill. Can i file my 2011 taxes on turbotax If so, use the rules in this section to find how much of it, if any, you can deduct. Can i file my 2011 taxes on turbotax Transfer taxes (or stamp taxes). Can i file my 2011 taxes on turbotax   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Can i file my 2011 taxes on turbotax If you are the buyer and you pay them, include them in the cost basis of the property. Can i file my 2011 taxes on turbotax If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Can i file my 2011 taxes on turbotax Homeowners association assessments. Can i file my 2011 taxes on turbotax   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Tenant-stockholders. Can i file my 2011 taxes on turbotax   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Can i file my 2011 taxes on turbotax The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Can i file my 2011 taxes on turbotax The units that the tenant-stockholder has the right to occupy can be rented to others. Can i file my 2011 taxes on turbotax Deductible taxes. Can i file my 2011 taxes on turbotax   You figure your share of real estate taxes in the following way. Can i file my 2011 taxes on turbotax Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Can i file my 2011 taxes on turbotax Multiply the corporation's deductible real estate taxes by the number you figured in (1). Can i file my 2011 taxes on turbotax This is your share of the real estate taxes. Can i file my 2011 taxes on turbotax   Generally, the corporation will tell you your share of its real estate tax. Can i file my 2011 taxes on turbotax This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Can i file my 2011 taxes on turbotax Refund of real estate taxes. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Most home buyers take out a mortgage (loan) to buy their home. Can i file my 2011 taxes on turbotax They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If either of these situations applies to you, see Publication 936 for more information. Can i file my 2011 taxes on turbotax Also see Publication 936 if you later refinance your mortgage or buy a second home. Can i file my 2011 taxes on turbotax Refund of home mortgage interest. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax For more information, see Recoveries in Publication 525. Can i file my 2011 taxes on turbotax The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Can i file my 2011 taxes on turbotax See Mortgage Interest Statement , later. Can i file my 2011 taxes on turbotax Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Can i file my 2011 taxes on turbotax The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Can i file my 2011 taxes on turbotax Prepaid interest. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Can i file my 2011 taxes on turbotax An exception (discussed later) applies to points. Can i file my 2011 taxes on turbotax Late payment charge on mortgage payment. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Mortgage prepayment penalty. Can i file my 2011 taxes on turbotax   If you pay off your home mortgage early, you may have to pay a penalty. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Ground rent. Can i file my 2011 taxes on turbotax   In some states (such as Maryland), you may buy your home subject to a ground rent. Can i file my 2011 taxes on turbotax A ground rent is an obligation you assume to pay a fixed amount per year on the property. Can i file my 2011 taxes on turbotax Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Can i file my 2011 taxes on turbotax Redeemable ground rents. Can i file my 2011 taxes on turbotax   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Can i file my 2011 taxes on turbotax The ground rent is a redeemable ground rent only if all of the following are true. Can i file my 2011 taxes on turbotax Your lease, including renewal periods, is for more than 15 years. Can i file my 2011 taxes on turbotax You can freely assign the lease. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Can i file my 2011 taxes on turbotax   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Can i file my 2011 taxes on turbotax You cannot deduct them. Can i file my 2011 taxes on turbotax Nonredeemable ground rents. Can i file my 2011 taxes on turbotax   Payments on a nonredeemable ground rent are not mortgage interest. Can i file my 2011 taxes on turbotax You can deduct them as rent only if they are a business expense or if they are for rental property. Can i file my 2011 taxes on turbotax Cooperative apartment. Can i file my 2011 taxes on turbotax   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 . Can i file my 2011 taxes on turbotax In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. Can i file my 2011 taxes on turbotax Refund of cooperative's mortgage interest. Can i file my 2011 taxes on turbotax   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Can i file my 2011 taxes on turbotax The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Can i file my 2011 taxes on turbotax   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Can i file my 2011 taxes on turbotax Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Can i file my 2011 taxes on turbotax You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Can i file my 2011 taxes on turbotax This amount should be included in the mortgage interest statement provided by your lender. Can i file my 2011 taxes on turbotax See the discussion under Mortgage Interest Statement , later. Can i file my 2011 taxes on turbotax Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Can i file my 2011 taxes on turbotax Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Can i file my 2011 taxes on turbotax Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Can i file my 2011 taxes on turbotax A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Can i file my 2011 taxes on turbotax See Points paid by the seller , later. Can i file my 2011 taxes on turbotax General rule. Can i file my 2011 taxes on turbotax   You cannot deduct the full amount of points in the year paid. Can i file my 2011 taxes on turbotax They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. Can i file my 2011 taxes on turbotax Exception. Can i file my 2011 taxes on turbotax   You can deduct the full amount of points in the year paid if you meet all the following tests. Can i file my 2011 taxes on turbotax Your loan is secured by your main home. Can i file my 2011 taxes on turbotax (Generally, your main home is the one you live in most of the time. Can i file my 2011 taxes on turbotax ) Paying points is an established business practice in the area where the loan was made. Can i file my 2011 taxes on turbotax The points paid were not more than the points generally charged in that area. Can i file my 2011 taxes on turbotax You use the cash method of accounting. Can i file my 2011 taxes on turbotax This means you report income in the year you receive it and deduct expenses in the year you pay them. Can i file my 2011 taxes on turbotax Most individuals use this method. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Can i file my 2011 taxes on turbotax The funds you provided are not required to have been applied to the points. Can i file my 2011 taxes on turbotax They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Can i file my 2011 taxes on turbotax You cannot have borrowed these funds. Can i file my 2011 taxes on turbotax You use your loan to buy or build your main home. Can i file my 2011 taxes on turbotax The points were computed as a percentage of the principal amount of the mortgage. Can i file my 2011 taxes on turbotax The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. Can i file my 2011 taxes on turbotax The points may be shown as paid from either your funds or the seller's. Can i file my 2011 taxes on turbotax Note. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Home improvement loan. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Refinanced loan. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You can deduct the rest of the points over the life of the loan. Can i file my 2011 taxes on turbotax Points not fully deductible in year paid. Can i file my 2011 taxes on turbotax    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. Can i file my 2011 taxes on turbotax Figure A. Can i file my 2011 taxes on turbotax   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Can i file my 2011 taxes on turbotax    Please click here for the text description of the image. Can i file my 2011 taxes on turbotax Figure A. Can i file my 2011 taxes on turbotax Are my points fully deductible this year? Amounts charged for services. Can i file my 2011 taxes on turbotax   Amounts charged by the lender for specific services connected to the loan are not interest. Can i file my 2011 taxes on turbotax Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Can i file my 2011 taxes on turbotax You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Can i file my 2011 taxes on turbotax For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Can i file my 2011 taxes on turbotax Points paid by the seller. Can i file my 2011 taxes on turbotax   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Can i file my 2011 taxes on turbotax Treatment by seller. Can i file my 2011 taxes on turbotax   The seller cannot deduct these fees as interest. Can i file my 2011 taxes on turbotax However, they are a selling expense that reduces the seller's amount realized. Can i file my 2011 taxes on turbotax See Publication 523 for more information. Can i file my 2011 taxes on turbotax Treatment by buyer. Can i file my 2011 taxes on turbotax   The buyer treats seller-paid points as if he or she had paid them. Can i file my 2011 taxes on turbotax If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Can i file my 2011 taxes on turbotax If any of those tests are not met, the buyer must deduct the points over the life of the loan. Can i file my 2011 taxes on turbotax   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Can i file my 2011 taxes on turbotax For more information about the basis of your home, see Basis , later. Can i file my 2011 taxes on turbotax Funds provided are less than points. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax In addition, you can deduct any points paid by the seller. Can i file my 2011 taxes on turbotax Example 1. Can i file my 2011 taxes on turbotax When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Can i file my 2011 taxes on turbotax You spread the remaining $250 over the life of the mortgage. Can i file my 2011 taxes on turbotax Example 2. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Can i file my 2011 taxes on turbotax You spread the remaining $250 over the life of the mortgage. Can i file my 2011 taxes on turbotax You must reduce the basis of your home by the $1,000 paid by the seller. Can i file my 2011 taxes on turbotax Excess points. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You must spread any additional points over the life of the mortgage. Can i file my 2011 taxes on turbotax Mortgage ending early. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Can i file my 2011 taxes on turbotax He had deducted $1,400 of these points through 2012. Can i file my 2011 taxes on turbotax Dan prepaid his mortgage in full in 2013. Can i file my 2011 taxes on turbotax He can deduct the remaining $1,600 of points in 2013. Can i file my 2011 taxes on turbotax Exception. Can i file my 2011 taxes on turbotax   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Can i file my 2011 taxes on turbotax Instead, deduct them over the term of the new loan. Can i file my 2011 taxes on turbotax Form 1098. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax See Mortgage Interest Statement , later. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Can i file my 2011 taxes on turbotax See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The seller must give you this number and you must give the seller your SSN. Can i file my 2011 taxes on turbotax Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Can i file my 2011 taxes on turbotax Failure to meet either of these requirements may result in a $50 penalty for each failure. Can i file my 2011 taxes on turbotax Table 1. Can i file my 2011 taxes on turbotax Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Can i file my 2011 taxes on turbotax IF you are eligible to deduct . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax THEN report the amount  on Schedule A (Form 1040) . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax real estate taxes line 6. Can i file my 2011 taxes on turbotax home mortgage interest and points reported on Form 1098 line 10. Can i file my 2011 taxes on turbotax home mortgage interest not reported on  Form 1098 line 11. Can i file my 2011 taxes on turbotax points not reported on Form 1098 line 12. Can i file my 2011 taxes on turbotax qualified mortgage insurance premiums line 13. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The statement will show the total interest paid on your mortgage during the year. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax See Points , earlier. Can i file my 2011 taxes on turbotax The interest you paid at settlement should be included on the statement. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Can i file my 2011 taxes on turbotax Write “See attached” to the right of line 10. Can i file my 2011 taxes on turbotax A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Can i file my 2011 taxes on turbotax If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Can i file my 2011 taxes on turbotax Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Can i file my 2011 taxes on turbotax If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Can i file my 2011 taxes on turbotax A copy of this form will be sent to the IRS also. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax You bought a new home on May 3. Can i file my 2011 taxes on turbotax You paid no points on the purchase. Can i file my 2011 taxes on turbotax During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Can i file my 2011 taxes on turbotax The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Can i file my 2011 taxes on turbotax The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Can i file my 2011 taxes on turbotax You can deduct the $5,100 if you itemize your deductions. Can i file my 2011 taxes on turbotax Refund of overpaid interest. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Generally, you must include the refund in income in the year you receive it. Can i file my 2011 taxes on turbotax See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Can i file my 2011 taxes on turbotax More than one borrower. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Show how much of the interest each of you paid, and give the name and address of the person who received the form. Can i file my 2011 taxes on turbotax Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Can i file my 2011 taxes on turbotax 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). Can i file my 2011 taxes on turbotax Prepaid mortgage insurance premiums. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax The premiums are treated as paid in the year to which they were allocated. Can i file my 2011 taxes on turbotax If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Can i file my 2011 taxes on turbotax See Publication 936 for details. Can i file my 2011 taxes on turbotax Exception for certain mortgage insurance. Can i file my 2011 taxes on turbotax   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax It also must be secured by that home. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Home acquisition debt limit. Can i file my 2011 taxes on turbotax   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). Can i file my 2011 taxes on turbotax Discharges of qualified principal residence indebtedness. Can i file my 2011 taxes on turbotax   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Can i file my 2011 taxes on turbotax You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Can i file my 2011 taxes on turbotax Principal residence. Can i file my 2011 taxes on turbotax   Your principal residence is the home where you ordinarily live most of the time. Can i file my 2011 taxes on turbotax You can have only one principal residence at any one time. Can i file my 2011 taxes on turbotax Qualified principal residence indebtedness. Can i file my 2011 taxes on turbotax   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Can i file my 2011 taxes on turbotax Amount you can exclude. Can i file my 2011 taxes on turbotax   You can only exclude debt discharged after 2006 and before 2014. Can i file my 2011 taxes on turbotax The most you can exclude is $2 million ($1 million if married filing separately). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Ordering rule. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Qualified Home This means your main home or your second home. Can i file my 2011 taxes on turbotax A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Can i file my 2011 taxes on turbotax Main home. Can i file my 2011 taxes on turbotax   You can have only one main home at any one time. Can i file my 2011 taxes on turbotax This is the home where you ordinarily live most of the time. Can i file my 2011 taxes on turbotax Second home and other special situations. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Can i file my 2011 taxes on turbotax Form 1098. Can i file my 2011 taxes on turbotax   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Can i file my 2011 taxes on turbotax See Form 1098, Mortgage Interest Statement in Publication 936. Can i file my 2011 taxes on turbotax Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Can i file my 2011 taxes on turbotax If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Can i file my 2011 taxes on turbotax Who qualifies. Can i file my 2011 taxes on turbotax   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Can i file my 2011 taxes on turbotax Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Can i file my 2011 taxes on turbotax The MCC will show the certificate credit rate you will use to figure your credit. Can i file my 2011 taxes on turbotax It also will show the certified indebtedness amount. Can i file my 2011 taxes on turbotax Only the interest on that amount qualifies for the credit. Can i file my 2011 taxes on turbotax See Figuring the Credit , later. Can i file my 2011 taxes on turbotax You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Can i file my 2011 taxes on turbotax Contact your state or local housing finance agency for information about the availability of MCCs in your area. Can i file my 2011 taxes on turbotax How to claim the credit. Can i file my 2011 taxes on turbotax   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Can i file my 2011 taxes on turbotax S. Can i file my 2011 taxes on turbotax Nonresident Alien Income Tax Return. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Reducing your home mortgage interest deduction. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You must do this even if part of that amount is to be carried forward to 2014. Can i file my 2011 taxes on turbotax Selling your home. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Can i file my 2011 taxes on turbotax Figuring the Credit Figure your credit on Form 8396. Can i file my 2011 taxes on turbotax Mortgage not more than certified indebtedness. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Mortgage more than certified indebtedness. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax Emily bought a home this year. Can i file my 2011 taxes on turbotax Her mortgage loan is $125,000. Can i file my 2011 taxes on turbotax The certified indebtedness amount on her MCC is $100,000. Can i file my 2011 taxes on turbotax She paid $7,500 interest this year. Can i file my 2011 taxes on turbotax Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Can i file my 2011 taxes on turbotax 80)       $125,000       $7,500 x . Can i file my 2011 taxes on turbotax 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Can i file my 2011 taxes on turbotax In each later year, she will figure her credit using only 80% of the interest she pays for that year. Can i file my 2011 taxes on turbotax Limits Two limits may apply to your credit. Can i file my 2011 taxes on turbotax A limit based on the credit rate, and A limit based on your tax. Can i file my 2011 taxes on turbotax Limit based on credit rate. Can i file my 2011 taxes on turbotax   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Can i file my 2011 taxes on turbotax Limit based on tax. Can i file my 2011 taxes on turbotax   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Can i file my 2011 taxes on turbotax See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax John and his brother, George, were issued an MCC. Can i file my 2011 taxes on turbotax They used it to get a mortgage on their main home. Can i file my 2011 taxes on turbotax John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Can i file my 2011 taxes on turbotax John paid $5,400 mortgage interest this year and George paid $3,600. Can i file my 2011 taxes on turbotax The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Can i file my 2011 taxes on turbotax The loan amount (mortgage) on their home is $120,000. Can i file my 2011 taxes on turbotax The credit is limited to $2,000 because the credit rate is more than 20%. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax His credit is limited to $1,200 ($2,000 × 60%). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax His credit is limited to $800 ($2,000 × 40%). Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax You receive a mortgage credit certificate from State X. Can i file my 2011 taxes on turbotax This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Can i file my 2011 taxes on turbotax You claim no other credits. Can i file my 2011 taxes on turbotax Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Can i file my 2011 taxes on turbotax You can carry forward this amount to the next 3 years or until used, whichever comes first. Can i file my 2011 taxes on turbotax Credit rate more than 20%. Can i file my 2011 taxes on turbotax   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). Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The amount of credit you can claim on the new loan may change. Can i file my 2011 taxes on turbotax Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Can i file my 2011 taxes on turbotax Table 2. Can i file my 2011 taxes on turbotax Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax THEN the interest you claim on Form 8396, line 1, is* . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax . Can i file my 2011 taxes on turbotax smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Can i file my 2011 taxes on turbotax larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Can i file my 2011 taxes on turbotax         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. Can i file my 2011 taxes on turbotax  See New MCC cannot increase your credit above. Can i file my 2011 taxes on turbotax An issuer may reissue an MCC after you refinance your mortgage. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Year of refinancing. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax It must show a separate calculation for the part of the year when the new MCC was in effect. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax New MCC cannot increase your credit. Can i file my 2011 taxes on turbotax   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Can i file my 2011 taxes on turbotax   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Can i file my 2011 taxes on turbotax However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Can i file my 2011 taxes on turbotax In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Can i file my 2011 taxes on turbotax   There are two methods for figuring the credit you could have claimed. Can i file my 2011 taxes on turbotax Under one method, you figure the actual credit that would have been allowed. Can i file my 2011 taxes on turbotax This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Can i file my 2011 taxes on turbotax   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Can i file my 2011 taxes on turbotax    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. Can i file my 2011 taxes on turbotax    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax While you own your home, you may add certain items to your basis. Can i file my 2011 taxes on turbotax You may subtract certain other items from your basis. Can i file my 2011 taxes on turbotax These items are called adjustments to basis and are explained later under Adjusted Basis . Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax You also must keep records of the events that affect basis or adjusted basis. Can i file my 2011 taxes on turbotax See Keeping Records , below. Can i file my 2011 taxes on turbotax Figuring Your Basis How you figure your basis depends on how you acquire your home. Can i file my 2011 taxes on turbotax If you buy or build your home, your cost is your basis. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Can i file my 2011 taxes on turbotax Each of these topics is discussed later. Can i file my 2011 taxes on turbotax Property transferred from a spouse. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The cost of your home includes most settlement or closing costs you paid when you bought the home. Can i file my 2011 taxes on turbotax If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Can i file my 2011 taxes on turbotax See Settlement or closing costs , later. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Purchase. Can i file my 2011 taxes on turbotax   The basis of a home you bought is the amount you paid for it. Can i file my 2011 taxes on turbotax This usually includes your down payment and any debt you assumed. Can i file my 2011 taxes on turbotax The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Can i file my 2011 taxes on turbotax This amount includes any purchase commissions or other costs of acquiring the shares. Can i file my 2011 taxes on turbotax Construction. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Can i file my 2011 taxes on turbotax You cannot include in basis the value of your own labor or any other labor for which you did not pay. Can i file my 2011 taxes on turbotax Real estate taxes. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You cannot deduct them as taxes paid. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Do not include those taxes in your basis. Can i file my 2011 taxes on turbotax If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Can i file my 2011 taxes on turbotax Example 1. Can i file my 2011 taxes on turbotax You bought your home on September 1. Can i file my 2011 taxes on turbotax The property tax year in your area is the calendar year, and the tax is due on August 15. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Can i file my 2011 taxes on turbotax You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Can i file my 2011 taxes on turbotax You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Can i file my 2011 taxes on turbotax Example 2. Can i file my 2011 taxes on turbotax You bought your home on May 3, 2013. Can i file my 2011 taxes on turbotax The property tax year in your area is the calendar year. Can i file my 2011 taxes on turbotax The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Can i file my 2011 taxes on turbotax Under state law, the taxes become a lien on May 31. Can i file my 2011 taxes on turbotax You agreed to pay all taxes due after the date of sale. Can i file my 2011 taxes on turbotax The taxes due in 2013 for 2012 were $1,375. Can i file my 2011 taxes on turbotax The taxes due in 2014 for 2013 will be $1,425. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Instead, you add the $1,375 to the cost (basis) of your home. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Can i file my 2011 taxes on turbotax Settlement or closing costs. Can i file my 2011 taxes on turbotax   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Can i file my 2011 taxes on turbotax These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Can i file my 2011 taxes on turbotax If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Can i file my 2011 taxes on turbotax   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Can i file my 2011 taxes on turbotax You deduct them in the year you buy your home if you itemize your deductions. Can i file my 2011 taxes on turbotax You can add certain other settlement or closing costs to the basis of your home. Can i file my 2011 taxes on turbotax Items added to basis. Can i file my 2011 taxes on turbotax   You can include in your basis the settlement fees and closing costs you paid for buying your home. Can i file my 2011 taxes on turbotax A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Can i file my 2011 taxes on turbotax   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Can i file my 2011 taxes on turbotax Abstract fees (abstract of title fees). Can i file my 2011 taxes on turbotax Charges for installing utility services. Can i file my 2011 taxes on turbotax Legal fees (including fees for the title search and preparation of the sales contract and deed). Can i file my 2011 taxes on turbotax Recording fees. Can i file my 2011 taxes on turbotax Surveys. Can i file my 2011 taxes on turbotax Transfer or stamp taxes. Can i file my 2011 taxes on turbotax Owner's title insurance. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Items not added to basis and not deductible. Can i file my 2011 taxes on turbotax   Here are some settlement and closing costs that you cannot deduct or add to your basis. Can i file my 2011 taxes on turbotax Fire insurance premiums. Can i file my 2011 taxes on turbotax Charges for using utilities or other services related to occupancy of the home before closing. Can i file my 2011 taxes on turbotax Rent for occupying the home before closing. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Points paid by seller. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax See Points , earlier, for the rules on deducting points. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Fair market value. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Donor's adjusted basis is more than FMV. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Disposition basis. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Your basis for figuring a gain is the same as the donor's adjusted basis. Can i file my 2011 taxes on turbotax Your basis for figuring a loss is the FMV when you received the gift. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax However, if using the FMV results in a gain, then you neither have a gain nor a loss. Can i file my 2011 taxes on turbotax Example 1. Can i file my 2011 taxes on turbotax Andrew received a house as a gift from Ishmael (the donor). Can i file my 2011 taxes on turbotax At the time of the gift, the home had an FMV of $80,000. Can i file my 2011 taxes on turbotax Ishmael's adjusted basis was $100,000. Can i file my 2011 taxes on turbotax After he received the house, no events occurred to increase or decrease the basis. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Example 2. Can i file my 2011 taxes on turbotax Same facts as Example 1 , except this time Andrew sells the house for $70,000. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Example 3. Can i file my 2011 taxes on turbotax Same facts as Example 1 , except this time Andrew sells the house for $90,000. Can i file my 2011 taxes on turbotax Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Can i file my 2011 taxes on turbotax Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Can i file my 2011 taxes on turbotax So in this situation, Andrew will neither have a gain nor a loss. Can i file my 2011 taxes on turbotax Donor's adjusted basis equal to or less than the FMV. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Part of federal gift tax due to net increase in value. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Can i file my 2011 taxes on turbotax Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Can i file my 2011 taxes on turbotax These events can increase or decrease your original basis. Can i file my 2011 taxes on turbotax The result is called adjusted basis. Can i file my 2011 taxes on turbotax See Table 3, on this page, for a list of some of the items that can adjust your basis. Can i file my 2011 taxes on turbotax Table 3. Can i file my 2011 taxes on turbotax Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Can i file my 2011 taxes on turbotax It is not intended to be all-inclusive. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Can i file my 2011 taxes on turbotax You must add the cost of any improvements to the basis of your home. Can i file my 2011 taxes on turbotax You cannot deduct these costs. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax Amount added to basis. Can i file my 2011 taxes on turbotax   The amount you add to your basis for improvements is your actual cost. Can i file my 2011 taxes on turbotax This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax These assessments are discussed earlier under Real Estate Taxes . Can i file my 2011 taxes on turbotax Improvements no longer part of home. Can i file my 2011 taxes on turbotax    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Can i file my 2011 taxes on turbotax Example. Can i file my 2011 taxes on turbotax You put wall-to-wall carpeting in your home 15 years ago. Can i file my 2011 taxes on turbotax Later, you replaced that carpeting with new wall-to-wall carpeting. Can i file my 2011 taxes on turbotax The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Can i file my 2011 taxes on turbotax Repairs versus improvements. Can i file my 2011 taxes on turbotax   A repair keeps your home in an ordinary, efficient operating condition. Can i file my 2011 taxes on turbotax It does not add to the value of your home or prolong its life. Can i file my 2011 taxes on turbotax Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Can i file my 2011 taxes on turbotax You cannot deduct repair costs and generally cannot add them to the basis of your home. Can i file my 2011 taxes on turbotax   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Can i file my 2011 taxes on turbotax You add them to the basis of your home. Can i file my 2011 taxes on turbotax Records to keep. Can i file my 2011 taxes on turbotax   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Can i file my 2011 taxes on turbotax Also see Keeping Records , below. Can i file my 2011 taxes on turbotax Energy conservation subsidy. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax You must reduce the basis of your home by that value. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Can i file my 2011 taxes on turbotax In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Can i file my 2011 taxes on turbotax How to keep records. Can i file my 2011 taxes on turbotax   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Can i file my 2011 taxes on turbotax How long to keep records. Can i file my 2011 taxes on turbotax   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Can i file my 2011 taxes on turbotax   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. Can i file my 2011 taxes on turbotax (A period of limitations is the period of time after which no legal action can be brought. Can i file my 2011 taxes on turbotax ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Returns filed before the due date are treated as filed on the due date. Can i file my 2011 taxes on turbotax   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Can i file my 2011 taxes on turbotax Keep those records as long as they are important in figuring the basis of the original or replacement property. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax Table 4. Can i file my 2011 taxes on turbotax Record of Home Improvements Keep this for your records. Can i file my 2011 taxes on turbotax Also, keep receipts or other proof of improvements. Can i file my 2011 taxes on turbotax Remove from this record any improvements that are no longer part of your main home. Can i file my 2011 taxes on turbotax 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. Can i file my 2011 taxes on turbotax (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