Owning a house offers many benefits. You can decorate and improve it to your heart’s content, enjoy freedom and privacy, and not have to deal with a snooping landlord. But if there is one thing homeowners hate is the costs that come with owning a home. But don’t let this fact stop you from buying your own house.
While the costs can be overwhelming, know that homeowners can enjoy several tax benefits. This helps you save more money in the long run. Of course, there are rules that you need to follow. But what kind of tax benefits can you take advantage of as a homeowner?
Mortgage Interest Deduction
Planning to buy your house with the help of a mortgage? Then know that you can deduct the interest you pay in each mortgage payment. The amount you can deduct will depend on when you took the mortgage. For you to check how much payment goes to your interest each year, simply check the statement your mortgage lender will give you.
Mortgage Insurance Tax Deduction
Do you pay private mortgage insurance for the home loan you took out last 2017? You can treat the amount you paid for the insurance as your mortgage interest. If you want something even better than a private mortgage insurance (PMI) tax deduction, then choose to cancel your private mortgage insurance once you acquire 20% equity in your home.
Solar Tax Credit
Installing solar panels is not only good for the environment—you will be using renewable energy for your home. You’ll also benefit from it, thanks to the savings you can enjoy and the solar tax credit you can get from it. To enjoy a solar tax credit, you need to meet the requirements set by the IRS. To make sure that you can get a solar tax credit, the first step is to find yourself a reputable SunPower solar panel dealer. You just need to fill out the IRS Form 5965. Just make sure that you don’t make a mistake while filling it out and submit it to the IRS.
Home Office Deduction
Are you planning to create a home office to support your business? You can qualify for a home office deduction. You can choose to do this with the simplified method or the regular method. Either way, you will need to meet the requirements before you can take advantage of the home office deduction. You should use the home office regularly and exclusively for business. It also needs to be the principal area for your brand.
Medical Tax Deduction
If you need certain home improvements that can medically benefit your family, you can use them as a medical expense deduction. These include entrance ramps and installation of support bars. Note that the deductible cost will depend on the value of the medically necessary home improvement added to your home.
Homeowners are not only able to enjoy tax breaks out of property taxes alone. By knowing the tax advantages that you can enjoy, you can take advantage of bigger savings. Lower your tax burdens by keeping this list in mind.