Tax Deductions Every New Homeowner Should Know
If homeownership is a new thing for you and your family, there may be some tax write-offs that you are unaware of. If we helped you to find a home this year, make sure to help yourself out when it comes to tax time. Proper care and attention when it comes to filing your return can help to save you thousands of dollars.
This is usually the biggest one for homeowners, and it is essential. Throughout the year, mortgage interest can add up really fast. You can deduct the interest on up to $750,000 of mortgage debt. If you took out your mortgage before 2017, you could deduct the interest on up to $1,000,000 of mortgage debt. Regardless of the origination of your loan, this deduction will likely knock thousands of dollars off of your tax requirements this year.
Some people don’t realize that as hard as that property tax bill can be to pay, it is a tax write off. This can make the sting just a little bit easier. Property taxes up to $10,000 can be deducted.
If you are a homeowner that needed mortgage insurance to purchase your home, you can use that as a deduction on your return at this point. Mortgage Insurance premiums are only deductible if you make less than $109,000 per year. The year 2020 will be the last year for deducting these premiums, so make sure to take advantage of this benefit while you can.
Are you self employed and running a small business or sole proprietorship out of your home? If you are, then you are entitled to write off expenses related to your home office. You must be using your office regularly and be a registered business to claim these deductions.
Medically Necessary Home Improvements
Although most home improvements are not deductible because they increase the value of your home if you had to make any accommodations to make the home safer or more accessible for a disabled individual that is fully deductible. If you installed an entrance ramp or railings or had to make adjustments to the safety of a bathroom, you can fully deduct those expenses. Typically speaking, adding a ramp to your home does not increase the value, and that is why these things can be used as deductions.
With all of the expenses incurred in buying a new home, don’t miss out on any of the money you can put back in your pocket. If you have questions about what things may not be tax-deductible, it pays to ask a licensed accountant or accounting firm before filing your return. If you spend a little money having a professional look at your tax return this year, it could end up saving you thousands of dollars.
As always, if you have any questions about real estate or property management, we are here to help. Don’t hesitate to contact us today.