A little late on filing your taxes? That’s okay; life happens! But before you rush off to make the deadline, take a look at these awesome tax deductions you as a homeowner could qualify for.
Property Taxes and Second Homes
All property taxes are deductible, and the higher the taxes, the more you can deduct–possibly thousands. Property tax deductions are also good news for those who own second homes, as taxes on that property can be deducted as well. Whether you own one property or several, be sure to look into this type of deduction to save yourself some cash.
Home Sale Exemption
This one is for those of you who sold a home in the past year and made a profit off of the sale. If you made capital gains on the sale of your home, you could qualify for a real estate capital gains tax deduction–one of the largest deductions offered to homeowners. To qualify, the home must have been your primary residence. The gains ceiling for married couples is $500,000 and $250,000 for single people.
Mortgage Interest Deductions
Legally, you as a homeowner are entitled to deduct up to a million dollars of mortgage interest. And if you’re like most homeowners who have quite a bit less than a million worth of mortgage interest, you get to deduct it all! Since most mortgages require that a homeowner pay the interest first, it’s a good idea to utilize this particular deduction in the early years of homeownership to maximize the benefits. Note that this deduction is not compatible with a reverse mortgage.
Home Improvement Loan Interest
Some loans for home improvements, like home equity loans, give you a tax break on the interest you pay. These breaks can be quite generous, and, like mortgage interest deductions, are most beneficial in the first few years of owning a home when most payments are going toward interest. If you’ve taken out a home improvement loan in the past year, be sure to look into what kind of breaks and savings it could net you.
Home Office Deduction
Work from home? You could be eligible for a home office tax deduction. It’s calculated by the square footage of the space, at $5 per square foot. Be aware, though, that the space must be used only for work and nothing else (not even yoga!). If you ever get audited, the IRS can decide that the home office deduction was invalid if the room was used for anything other than work.
Still stumped about taxes? Want to know more about how your home or property could save you money during tax season? Contact a Showcase agent to learn what deductions you may be eligible for.