It’s Tax Season! Have You Heard of These 7 Tax Breaks for Homeowners?
Make the Most Out of Your Taxes This Year With These Tax Breaks
Owning a home has always benefited homeowners at tax time. The reason for this is because owning a home enables a homeowner to take advantage of certain tax breaks that can help them enjoy a higher return. If you’re a new homeowner, this may be your first time filing your taxes as one, so it is important for you to be aware of what types of tax breaks for homeowners you might be eligible for.
Here are seven money-saving tax breaks for homeowners to claim on their taxes.
#1: Mortgage Interest & Property Tax Deductions
If you’re married and filing jointly, you can deduct the mortgage interest on any loans you used to buy or build your home, up to $1,000,000. The deduction is cut in half to $500,000 if you are filing separately. You are also allowed to deduct the property taxes you paid for your home over the year. Another possible deduction for any interest paid on home equity loans or lines of credit up to $100,000 ($50,000 if married and filing separately), regardless of what the money was used for.
#2: Mortgage Interest Credit
If your state or local government mailed you a Mortgage Credit Certificate (MCC), then you may qualify to have that credit applied to your taxes, which will reduce your total tax liability.
#3: Points Paid at Closing
If you bought or refinanced your home in 2017, then any points you paid at closing can be deducted. But, only the points that were paid with a home purchase can be fully deducted in the tax year the home was purchased. Points paid for a refinance are deducted over the course of the loan.
#4: Home Offices
If you use a room in your home as a home office, then you can deduct a portion of your home’s utilities, taxes, repairs, insurance, and mortgage interest as business expenses on your taxes. There’s also a tax break for depreciation for the portion of the home the office is located in. In order to qualify, the office must be used regularly and exclusively for business. It must either be the actual place of business or a place where the homeowner meets with patients, clients, or customers. A detached home office can also qualify.
#5: Moving Costs
If you moved 50 miles or farther from your previous address, then you will be able to deduct your moving expenses. You can deduct this regardless of whether you moved for a new job or are self-employed, but in order for self-employed to qualify they must work at least 75% of the next two years in their new location.
#6: Accidental Loss
If your home was damaged by storms, an earthquake, fire, flood, theft, or any other accepted cause of accidental loss in 2017, and the losses exceeded 10% of your adjusted gross income, you can claim the amount as a deduction on your taxes. To qualify, the losses must have occurred suddenly and unexpectedly, or be unusual in some way. Losses such as damage caused by termites or corroded plumbing pipes are not considered accidental, so they do not qualify for the deduction.
#7: Purchase of a Second Home or Vacation Home
If you purchased a second home or a vacation home and your property was rented for 14 days or less out of the year, then you will be eligible to deduct the mortgage interest and property tax for that home. If your second property is rented longer than 14 days, it is considered an income property by the IRS. In this case, the property’s mortgage interest, property taxes, and other expenses must be deducted against any income that was produced by it over the course of the year.