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TaxesBlog posted On October 19, 2022
Not only is owning a home a great investment for the future, but it also comes with numerous tax benefits that can help reduce the amount you owe when filing your taxes. Below are tax benefits you can take advantage of as a homeowner.
Tax Deductions:
Mortgage Interest
Deduct up to $750,000 in interest payments.
Real Estate Taxes
You can deduct state and local property taxes every year, up to $10,000/year.
Discount Points
If you paid for discount points when your loan closed, you can deduct them that same year.
Mortgage Insurance
Private mortgage insurance, mortgage insurance premiums, VA & USDA funding fees are all deductible (unless your income is above the limit).
Self-Employed Home Office
If you just work from home, you can’t claim this deduction. The deduction only applies to small business owners and self-employed workers who use part of their home regularly and exclusively as their primary place of business.
Medically Necessary Home Improvements
Examples of these improvements include widening doors, installing ramps or lifts, lowering cabinets, and adding railings.
Military Moving Expenses
If you’re a part of the armed forces, have to move, and have to pay out-of-pocket for expenses like transportation and storage of household and personal items, and travel and lodging from your old home to your new home, you can deduct these expenses.
Tax Credits:
Energy Efficient Improvements
Examples include solar electric property, solar water heaters, geothermal heat pumps, small wind turbines, and fuel cell property.
Mortgage Credit Certificates
Low-to moderate-income buyers and first-time buyers may be eligible for mortgage credit certificates, which can give you credits on your interest for your tax return.
Other Benefits:
Home Sale
The capital gains tax exclusion allows you to avoid paying taxes on the first $250,000 in profits from selling your home if you’re single, or $500,000 if you’re married.
It is recommended to speak to a tax professional to give advice about your specific situation and to ensure you are maximizing your deductions.
Sources: Forbes
