Let me guess, you’re a late filer because you’re trying to think of every deduction possible that you can take. If that is your plan, then let’s take a look at 7 tax deductions homeowners can take to save money. If you are a homeowner, There are far more benefits awaiting you than the standard property-tax deductions.
All of these savings combined will go a long way in compensating for the fixed costs involved in home ownership. Some of these benefits aren’t commonly known, so it’s important to work with a tax professional and learn all you can so you can take full advantage of them:
If you’ve borrowed a loan to purchase your home, the monthly payments you make are tax-deductible, as long as the loan amount falls within $1 million. For higher amounts, your deductible interest will decrease. Tax reductions on mortgage payments can help you save a sizable chunk of money you would otherwise have to cough up.
Loan borrowers are able to write off points on their loans. Each point equals 1% of your principal loan amount, as these points are considered as prepaid interest. It’s easier to avail deductions if you are buying your first home. Second- or multiple-time homeowners may have to spread out the deductible amount.
The interest payments on home improvement loans are fully deductible. However, keep in mind that loans worth more than the value of the home are not deductible, in which case you’ll have to pay the full tax amount.
Property taxes are subject to tax cuts as itemized deductions. It’s important to note that the amount deducted doesn’t depend on when the tax is due, but when you actually pay it. This means the earlier you pay, the higher your returns. Also, remember that some property costs are not deductible; these include expenses like appraisal fees, attorney fees, credit reports, title insurance, etc.
If you’re selling off your home, you can avoid paying capital gains taxes as long as the gains you make from the sale are less than $250,000 (for single taxpayers) or less than $500,000 (for joint payers). Keep in mind, this benefit can be availed only if you’ve used the home as your primary residence for a period of at least 2 years.
Tax benefits are available to homeowners who made efforts to make their home more energy efficient in 2014. This includes the installation of energy-friendly windows, heating and air conditioning systems, storm doors and insulation. You can gain a tax benefit of up to $500. Remember, however, that this credit will expire come December 31, 2016, so avail it while you can!
If you’ve rented out your home for a big cultural or sports event, the income you gain from this rental is fully tax-free, provided it’s based over a maximum period of 14 days.
The above tax breaks are available for all homeowners, however, it is important to know that you need to speak with your tax professional to see what current options are available for you. We are not tax professionals, but we can refer you to one that we recommend. Give us a call today at 855-66A-TEAM, or enter your information here to get a fair offer for your house fast. We look forward to helping you in any way we can solve your real estate issues as we have helped many others.