Ready for a riddle? What begins in January, has to be done every year, and ends in a harsh April deadline? Well, get out the calculator, because the answer is TAX SEASON! Many Americans are thinking about the normal thrills and chills of the filing season and hoping it gets wrapped up with money back. If you’re a proud owner of a home, you’re eligible to maximize your financial investment in home ownership and deduct many home-related expenses. Here are five home sweet tax breaks you don’t want to miss this year.
1. Mortgage Interest. Your house payment is your biggest tax break, and all that interest is deductible on any mortgage up to $1 Million. Own multiple properties? You’re in luck! Mortgage interest on a second home is fully deductible as well! (sometimes life aint so bad after all!)
2. Property Taxes. Another big part of your monthly loan payment is property taxes. To qualify for the deduction, you must own the property and can claim only the amounts you paid in the given tax year.
3. Points. Not only do they get you a better rate on your home loan, but they offer a tax break too. These fees can be fully deducted in the year you paid them provided they are associated with the purchase of a home.
4. Home Improvements. Certain types of home improvement projects are tax-deductible. For instance, if you’re making home renovations for medical reasons, the project costs are typically 100% tax deductible. Or, if you make home improvements to sell your home, and if they are made within 90 days of the closing, they are considered selling costs and are therefore deductible as well.
5. Equity Loan Interest. You may be able to deduct some of the interest paid on a home equity loan. Make sure you pay attention before you file for this, as the IRS limits the amount to $100,000 if filing jointly, or $50,000 for each person of a married couple if they are filing separately.
For specific decisions on your tax filings, you should always check with a professional accountant.