Whether you own a luxury home in University City or a house in Mint Hill, tax day is fast approaching—and it’s always a good idea to make sure you’re not missing any homeowner deductions or credits that you’re entitled to receive.
This isn’t tax advice; it’s just a guide that can help you spot credits or deductions that you may have missed. If you need tax advice, it’s a good idea to talk to a licensed tax professional.
What Tax Deductions and Credits Are Available to Homeowners?
The Internal Revenue Service has a number of deductions and credits for homeowners, but they don’t all apply to every owner. Some of the most notable include mortgage interest deductions, private mortgage insurance, and property taxes.
Mortgage Interest Deductions
All of the interest you pay on your mortgage may be tax-deductible. This can be especially beneficial if you have a newer loan, because most mortgages require you to pay the interest first and the principal later.
Private Mortgage Insurance Deductions
If you’re paying for private mortgage insurance, or PMI, you may be able to deduct the cost on your taxes. There are income limits, though, so it’s best to check with a tax adviser if you’re not sure whether you’re eligible.
Property Tax Deductions
Property taxes are typically deductible when you file your taxes.
If you bought your home or refinanced last year, you may have paid points. If you did, you could be eligible to deduct their cost (each point is typically 1 percent of the loan amount). However, points you incur when you buy are calculated differently from those you incur when you refinance.
Home Improvement Loan Interest
If you took out a home equity line of credit, which is also called a HELOC, or a home equity loan that you used to improve your home, you may be eligible to deduct up to $100,000 of interest on it.
Energy-Efficiency Upgrade Credits
You could get up to a 30 percent credit for making “green” improvements to your home. Some improvements are worth more than others are, but anything from roofing and insulation to solar panels and fuel cells can get you some cash back on your taxes.
Home Office Deductions
If you work from home and use part of your house exclusively as an office, you might be eligible for a home office deduction. The IRS is pretty stringent about what qualifies as an office, though, so it’s best to talk to a tax adviser if you plan to take this one.
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