Homeowners Tax Tips
Homeowners are eligible for more tax benefits than renters, but you don’t just get these handed to you by the IRS. There are very specific deductions and paperwork that need to be filled out in order to claim these benefits. You will want to research new tax guidelines and laws each year before filing.
- Mortgage Interest Deduction
This is a huge one for homeowners. There is a cap of $1.1 million but this includes all mortgages, not just one. You are also able to deduct points on multiple mortgages.
- Insurance and Taxes
Private mortgage insurance is also deductible (as well as state and local property taxes) on your federal return. In some locations, and in some cases, you can also get special property tax benefits, usually in lower income communities.
- Green-energy efficient deductions
Green energy tax credits are going away, but there are credits for energy efficient doors, windows and HVAC. The cap is still only $500 but it is something. The large deduction for energy efficiency is solar installations. The requirements are that it is your primary residence, not a rental property. The credit is 30% and includes the total cost of panels, installation, wiring, and basically everything. That’s a huge credit!
- Sale of your home
Selling your home also offers you many deductions and credits. You can claim the title insurance, advertising and agent or broker fees as expenses of the sale. Also any many repairs you completed within 90 days of the sale with the intent of marketing the property can reduce your capital gains. If you move more than 50 miles from your old home due to job relocation, you could deduct reasonable moving costs.
- Disaster-casualty losses
Considering the harsh winter we had last year, this may play out well for many homeowners. If your loss or damages added up to more than 10% of your gross income, you can deduct the overage.
With everything tax and IRS related, you need to have documentation. Always file receipts, take photo inventory of personal property and keep extra copies in a safe place outside of your home. It takes a bit of effort to be able to write off deductions and qualify for credits, but they are worth it come tax filing time.