Homeowners spend a lot on many things towards their home. Here are some common tax deductions and credits for homeowners:
1 Deductions for local taxes
Annual property tax is paid by any homeowners on the basis of value their home has. But many of us don’t know that these local property taxes are allowed as legal deductions by the federal government and hence are totally tax deductible.
2 Doing business from home
If you own a business which you are maintaining from your residence and thus it is your home office, you can deduct the home office expenses. But this process of home office deduction is better handled if you prefer to consider consultation from tax CPA. This way you can appropriately deduct the expenses incurred for maintaining your home office.
3 Loss due to casualty
Casualty losses are the expenses you suffered due to any natural calamity as storm, flooding or a mishap such as fire which is not happened due to your carelessness. This amount is also deductible but is bound to many rules and regulations. To tackle with this you should consult your tax CPA.
4 Interest paid on mortgage
The IRS has allowed deduction for the interest that you are paying for your mortgage for a limit of $1.1 million. This stands as the largest available tax break in the tax code that a homemaker can have for the mortgage interest deduction.
5 Enhancements due to health related issues
If any improvements or changes in home structure as the home renovations or home remodeling is done on medical grounds and is related to some health related issues, the expenditure is deductible in such cases. This can be restructuring made for the convenience of a disabled or ill person residing in the home. Some common examples are air condition units or handicap ramps and so on.
6 Green Credit
If you are a responsible citizen taking some extra efforts to save our planet by doing things such as buying appliances which are energy-efficient and used for home. You can also install solar power panels you can also earn tax deduction credits. So with saving our planet you can also make arrangements for savings on your taxes!
7 Points for paid refinance loan
Even though Refinancing is a headache, still it has its own benefits. You are eligible for deduction points if you have refinanced recently. But then you cannot deduct the total points at the same time, you need to divide it evenly over the loan period. If you had a loan for 20 years, then as you have 40 total points, you can deduct 2 points per year.
8 Selling costs
As we know we have deductions for owning and maintaining our home, now we have deductions also for selling our home. You have to declare these deductions after including all the expenses you paid for selling your home. These can be the fees you paid for real estate agency or legal fees. If you are doing some improvements in your home to add to its gain value such as painting or landscaping, these are also deductible.
Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.
Tags: Credits, Deductions, Home Improvement FAQ, Homeowners, meant by admin
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