Once the tax season comes around, people are always looking for tax breaks. Owning a home, and if itemizing deductions in your tax return makes financial sense, there are ways to get decent tax deductions from being a homeowner. If your tax sum is more than a standard deduction, definitely consider itemizing it. If not, you’ll have to take the standard deduction. However, let’s look at some tax deductions for homeowners to include in these calculations.
Simply put, you can get a tax break for providing property taxes. However, there is a limit, but you can deduct up to $10,000 or $5,000 if you’re filing separately and you are married. This is sometimes overlooked for your homeowner’s deduction, but it can definitely be added.
You can deduct office expenses if you are self-employed and working out of your home. Since this is exclusively for your home business. The IRS website provides details about determining which home office expenses are able to be qualified for a tax deduction.
Medical Improvements For Your Home
If you have installed necessary healthcare equipment or other medical equipment inside your home that benefits you, your spouse, or a dependent, you can get this deducted as well. This would include installing ramps, widening doorways, installing rails for staircases, installing support bars and – or installing an escalator system for your stairs.
Adding solar power to your roof is not only a benefit for your home and the environment, but it can also be added to your tax deduction. The IRS has stated, that it will allow you to take 26% of the cost installing solar systems as a tax credit. So not only can it benefit your wallet in the long run but the environment as well. However, by the year 2021, it will be decreased to 22%, and with the years after, it is to go away entirely, so take advantage of this while you can.
Mortgage Interest Rates
This is by far the most advantageous tax benefit. Interest paid on the mortgage for a primary residence can often be deducted if the consumer itemizes deductions on their federal income. Is it possible to claim a deduction for any interest that has been paid on mortgages for the building, purchasing a home or even a mortgage for home improvement.
However, it is necessary to speak with a financial advisor or accountant on these matters. Typically, if the amount of the mortgage does not surpass $750,000, the interest rate towards the mortgage can qualify as a deduction. An interest rate that goes over this amount is typically not qualified for a tax deduction.
It is also important to understand that there are things you cannot deduct. This would include dues for a homeowner’s association fee, appraisal fees, insurance on your house, and cost of improvements to your home, except medical equipment.