tax deductions-enriquehomes

As tax season knocks on the door, homeowners like you are on the lookout for those valuable tax breaks. The good news? There’s a trove of deductions waiting to be explored, potentially saving you thousands.

Decoding Standard Vs. Itemized Deductions

Understanding the play between standard and itemized deductions is crucial. The IRS extends the standard deduction to all, ranging from $13,850 for singles to $27,700 for married couples filing jointly. When you itemize, including homeowner tax breaks, your total deductions offset taxable income.

Ensure your itemized deductions surpass the standard deduction for maximum benefit.

Navigating Nondeductible Home Expenses

While you aim to maximize tax benefits, tread carefully with nondeductible home expenses. Items like fire insurance, mortgage principal, and certain utilities won’t make the deduction cut. Consult a tax professional for clarity on what you can’t deduct.

8 Tax Breaks Tailored for Homeowners

1. Mortgage Interest

Dive into the world of mortgage interest deductions. Previously up to $1 million, now capped at $750,000, this deduction can significantly reduce taxable income.

2. Home Equity Loan Interest

Explore the realm of home equity loan deductions. Deduct interest on loans used for home improvement, courtesy of the Tax Cuts and Jobs Act of 2017.

3. Discount Points

Discover the strategic move of purchasing discount points to lower your mortgage interest. Deduct the cost when used to reduce interest rates.

4. Property Taxes

Facing property taxes as a homeowner? Deduct up to $10,000 (for joint filers) or $5,000 (for singles) depending on your location.

5. Necessary Home Improvements

Certain home improvements qualify as deductions, especially those deemed necessary for medical reasons. Think ramps, widened doorways, or medical equipment installations.

6. Home Office Expenses

If your residence doubles as your workplace, navigate the IRS requirements for deductible home office expenses. Exclusive business use is key.

7. Mortgage Insurance

Don’t overlook private mortgage insurance (PMI). Deduct these payments on your itemized tax return, providing financial relief.

8. Capital Gains

Selling your home for a profit? Understand the ins and outs of capital gains tax breaks. Live in your home for 2 of the last 5 years, and you could be looking at substantial tax-free gains.

The Bottom Line: Maximize Your Home’s Financial Potential

Owning a home unlocks a treasure trove of financial and tax benefits. As tax season approaches, evaluate potential deductions. Compare itemized and standard deductions to make an informed decision.

If you’re a homeowner, delve into your tax deductions. For personalized guidance, consulting with a tax professional is a smart move. Ensure you’re making the most of every available tax break. Your home sweet home deserves it!

Share This