It is a good idea to make sure that, as a Houston homeowner, you have taken advantage of all the tax benefits available to you.

Doing the math on itemizing is a worthwhile exercise.  It is best to use a tax planning software that computes your tax liability both ways to make sure you aren’t paying more than you need to in taxes. Remember, if you are in the 28% tax bracket, every dollar your taxable income is reduced by mortgage interest you’ve paid cuts your tax liability by 28 cents.

If you purchased a home last year, you may be able to deduct “points” paid on your mortgage.   To qualify, the points must represent a percentage of your loan amount and be reflected on your HUD Settlement Statement. Even points paid by the seller may be deductible if your cost basis is adjusted. Only points paid on your primary residence are eligible to be deducted in the year paid, points on second homes must be deducted over the life of the loan.

If your joint income is $100,000 or less, or you file single and make $50,000 or less, your mortgage insurance premiums paid may be deductible. Single, annual, or lump-sum mortgage insurance premiums are fully deductible through the end of this year. The deductibility is phased out at higher income levels. The amount of these premiums should be reflected in the 1099 you receive from your mortgage lender.

If you completed a mortgage modification, lost your home through foreclosure, or sold your home through a short sale in 2010, there are special tax rules that apply to you. Normally, any time all or a portion of your debt is forgiven or eliminated; you are taxed on this amount - which the IRS calls Cancellation of Debt Income. The Mortgage Debt Forgiveness Act of 2007 provides a waiver of these rules through 2012. If you are facing a distressed sale situation right now, it is in your interest to get the transaction completed as soon as possible. 

Lastly, make sure to set your alarm to remind you to protest your property tax appraisal with your local taxing authority. Declining home values carry the subtle benefit of lower property taxes IF you do the leg work.  

Your home provides you with a place to live, serves as a method of forced savings, and can even deliver a myriad of tax benefits for the homeowner who knows how to take advantage of them.