Homeowner Tax Benefits
Tax season has arrived AGAIN! Whether you currently own a home or are considering the purchase of a home, here are some tax benefits you will want to consider:
The following information was found on Realtor.Com:
· The ability to deduct the interest on a mortgage continues to be a significant benefit of owning a home. If your mortgage loan began before December 15.2017, you can deduct interest up to $1million – after that date, homeowners can deduct interest on the first $750,000, according to Lee Reams Sr., chief content officer of TaxBuzz.
· Homeowners can get a tax break on property taxes. Taxpayers’ maximum deduction is $10,000 for those married and filing jointly, says Brian Ashcraft, director of compliance at Liberty Tax Service.
· Tax break #3 involves energy efficiency upgrades. According to Bishop L. Toups, a taxation attorney, qualifying solar electric panels and solar water heaters are good for a credit of up to 30% of the cost of the equipment and installation.
· Energy-efficient upgrades made to your home through December 31, 2022, qualify for a home improvement lifetime credit of $500. Plus, there has been an extension and expansion of the credit, which means that beginning January 1. 2023, the amended credit will be worth up to $1200.
· For homeowners who plan to age in place and add renovations to their house (wheelchair ramps, bathroom grab bars, etc.), any improvements exceeding 7.5% of your gross income, qualify for a tax credit. To claim this deduction, you will need a letter from a doctor indicating the medical necessity of the alterations.
· Interest on a home equity line of credit (HELOC) is deductible if the loan is used specifically to “by, build, or improve a property.” You will only be able to deduct up to the $750,000 cap, and this is for the amount you pay in interest on your HELOC and mortgage combined.
Forbes Advisor lists additional these tax credits:
· Home office deductions apply to small business owners, including self-employed people, who use part of their home regularly and exclusively as their primary place of business. The types of home expenses you can claim include: real estate taxes, home mortgage interest, mortgage insurance premiums, depreciation, insurance, repairs, security systems, and utilities. One caveat – there are many rules that you mut carefully follow to claim deductions legitimately.
· If you sell your home AND have lived in it for two of the last five years, you don’t have to pay taxes on the first $250,000 of profit from the sale if you’re single, or $500,000 if you’re married. These amounts are exemptions, which let you keep much more of your money than a capital gains deduction would. Additionally, keep receipts for costs associated with maintaining and improving your home. You can add many of these expenses to your home’s cost basis to reduce any capital gains when you sell.
Fox Business has this to add:
· If you are a new homeowner who purchased mortgage discount points as part of your closing costs, the IRS considers these points as interest. Depending on the specifics of your situation you may be able to deduct the full amount as a deduction.
As always, make certain you are aware of all tax laws by contacting a professional to ensure that you are following all legal requirements for claiming any tax credit, exemption, or deduction.
Our motto at Sandi Downing Real Estate is
“providing exceptional client services”