What Is IRS Publication 530?

IRS Publication 530 is a tax document for homeowners that details how tax filers should treat costs related to owning a home. This document spells out for homeowners how to manage mortgage interest, closing costs, real estate taxes, and repairs when it comes to filing taxes.

Key Takeaways

  • If you own a home or other real estate, IRS Publication 530 will help explain what is taxable and how to calculate what you owe.
  • Rental income and capital gains from the sale of properties above cost basis are the two major taxable events on most homes.
  • On the other hand, real estate taxes, mortgage interest, and capital improvements may be eligible as deductions.

Understanding IRS Publication 530

IRS Publication 530 is an Internal Revenue Service (IRS) document containing tax information for homeowners. The types of properties IRS Publication 530 could refer to include houses, condominiums, mobile homes, apartment homes or house trailers that contain sleeping spaces and cooking facilities. 

The Internal Revenue Services (IRS) publishes this tax document, which also outlines what home-related items can and cannot be deducted on the homeowner’s tax return, and what items a taxpayer should keep track of in order to set the cost basis of the property. Some expenses, such as depreciation, closing costs, forfeited down payments and insurance cannot be deducted.

Taxpayers must fill out Schedule A of Form 1040 to itemize home-related expenses. Itemizing deductions in this way means that the standard deduction cannot be claimed. To claim a mortgage interest credit, a homeowner must submit Form 8396 – Mortgage Interest Credit, as well as Form 5405 – First-Time Homebuyer Credit and Repayment of the Credit, for credits related to the purchase of a new home.

Real Estate Taxes

State and local governments typically charge an annual tax on the value of property called a real estate tax. A homeowner may deduct this tax if it is assessed uniformly on all real property throughout the community. 

Itemized charges for services to a specific person or property are not considered taxes, even if the charges are paid to a taxing authority. Additionally, a unit fee for delivery of a service is also not deductible as a real estate tax. Other charges that cannot be deducted as real estate taxes include periodic charges for a residential service, such as a $30 monthly charge or a $200 annual fee for utilities, and flat fees charged for a single service provided by local government, such as a lawn mowing fee because the homeowner’s lawn had grown higher than permitted under city ordinance.

These types of charges should be included in a homeowner’s real estate tax bill. IRS Publication 530 encourages homeowners to contact their taxing authority if they do not receive a copy of their real estate tax bill with information about real estate taxes and non-deductible itemized charges.