Are you making the most of homeowner tax breaks?

A home is often the most expensive purchase of a person’s life. Not only is the initial sale pricey, but the maintenance, repair, and upkeep costs associated with it can burden people’s finances for years to come.

To alleviate this strain, homeowners need to understand and apply for any deductibles or credits available to them. We’ve highlighted the main ones that homeowners should be applying for and explained how they can offset the cost of a home.

1. Mortgage Interest

One of the largest deductions that homeowners are able to claim is the interest paid on a mortgage. If you incur interest on a mortgage loan, be sure to track every payment made throughout the year and how much you paid in interest, since this amount needs to be itemized for it to be an eligible deductible.

Once homeowners verify how much was spent on interest, Form 1098 needs to be filled out declaring the amount before the deduction can be received.

2. Property Taxes

Owners can apply for a deduction of up to $10,000 on the property taxes that they’ve paid that year. This amount is meant to cover both state and local property tax (SALT) payments and applies to primary residence owners.

3. Home Upgrades

The IRS offers benefits for certain energy-efficient home upgrades, like solar panels. These discounts are applied dollar for dollar to a final tax bill. Applicants just need to be sure they have receipts from the installation and that the work qualifies.

Medical upgrades can get owners a credit, but the IRS needs to verify that they are necessary. This means that a medical doctor should sign off on things like a ramp or guardrail before completing the work and applying for the rebate.

4. Capital Gains Exclusions
If you recently sold a home that you were living in for at least two of the last five years, you may be able to exclude this profit from your taxable income. The IRS states that up to $250,000 can be excluded for single filers and up to $500,000 for those filing jointly.

5. Home Equity Loan Interest

Owners that used a home equity loan or line of credit to purchase a property can claim a deduction on their taxes for the interest paid on the loan. Owners applying for this deduction need to carefully document all of the interest charges to know exactly how much was spent over the year. Plus, it is recommended to review the IRS requirements, which state that only loans used to buy, build, or substantially improve a home will qualify.

6. Disaster and Casualty Losses

If your home suffered major damage or was completely destroyed by an event declared a disaster by the federal government, you might be able to claim it as a casualty loss deduction.

Casualty loss deductions can be tricky to get approved, so be sure to document all the damage and keep detailed records of the repairs needed and any insurance reimbursements that may have been issued.

If you’ve checked the IRS’s website for homeowner deductible and credit requirements but are still unsure what you’re eligible for, give us a call at 407-328-5001.

Our staff at A.P. Accounting and Tax Services would be happy to review potential tax breaks that could lower your bill. We’ll work with you to ensure every document is in place so that you can make the most out of your home.

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