Taxes for Homeowners
Oh my! Taxes are pretty much inevitable for most of us one way or another, aren't they. They can be challenging to do.
I have to admit, the quote below by Einstein made me feel a lot better! 🙂 Yes, we do all need to chip in. However, we also shouldn't pay more than our share. And hopefully your tax bill won't create an unjust burden on you. Most of us pay both income and property taxes. In essence that means that for homeowners, your tax burden is doubled. Here are some general homeowner tax deductions* that you might be able to take advantage of to help decrease your tax burden and boost your tax savings. Then, you can take those tax savings and use them for things you'd prefer like:
- increase your child or grandchild's college money
- work on bulking up your retirement savings
- finally get started on that home improvement project you've been wanting to do
- maybe even take a grand vacation
Home Improvement Tax Deductions
Since you usually spend the majority of time in your home, it's always a delight to keep it well maintained and make it a comfortable and lovely place to live. If you have a list of upgrades you plan to make on your home, you might want to plan ones that will basically help pay for themselves.
Did you know that, at one time, you could get a tax credit of up to $500 if you installed energy efficient insulation, air-conditioning, and heating systems (energy-efficient tax credit). Also, at that time, you could trade in your old windows for new updated energy efficient ones and you might earn $200. This credit expired 12/31/16 but there could be new ones out, or coming, so it's always wise to do some research to see what, if any, tax credits are available for you and your home. It can really pay off!
Mortgage Interest – Refinancing
It's never fun to see that monthly mortgage payment, is it? So it's nice to know that you may qualify to deduct the following:
- Mortgage interest
- Mortgage interest payments for additional property
- Rental properties that you own
- Home equity lines of credit (HELOC) and refinancing – up to $100,000
If you own more than one property, the mortgage interest on that extra property is also deductible. And it doesn't necessarily have to be another house. It can also be an RV or a boat. If it has cooking, sleeping, and bathroom facilities, it should count as an additional property though there can be some caveats – click here read one tale. If you do use your second house as a rental, click here for details on deductions.
In addition, you may be able to claim points on your mortgage in the year you paid for them if:
- The loan was to buy or build your primary house
- Payment of points is an established business practice in your area and the points were within the usual range
Property Taxes For Home Buyers
Here's a big chunk! I very much appreciate the fact that the property taxes we pay each year are tax deductible. Check your lender's annual statement to get the amount of property taxes paid for the taxable year. The schedule A tax form has an itemized expense spot for them.
First time homebuyers and new home buyers this year, be sure to look at your settlement sheet to find out what, if any, additional tax payment data may be there. You should be allowed to deduct the portion of property taxes you have paid during the 1st year of owning your home.
Happy Tax Savings Uses
Owning a home means you usually have several options that are available to lower your tax burden. That is happy news as it means you might have more money to save for those special major life events coming up such as weddings, growing your family, home improvement fun, vacations, and college expenses.
To learn more about your tax saving options* as a homeowner, please click here for tax information for homeowners. You can also contact me directly and I'll be glad to point you to great research and resource options with the goal of helping you with all your real estate needs.
*The tax information contained in this real estate blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. I always recommend that you consult with your own tax specialist or attorney to see what is appropriate for your personal needs and situation. 🙂