Homeownership and Tax Season: What You Need To Know

Tax Season Is Upon Us: How Does Being A Homeowner Impact Your Taxes? 

Freedom, stability, fixed monthly payments, and equity-building are well-known benefits of owning a home. Less commonly discussed are the tax benefits associated with owning a home. If you want more insight into how homeownership impacts your taxes as April approaches, read ahead!

Deductions: What Can I Include?

Property tax payments: 

According to TurboTax, if you itemize your returns, you can deduct paid property taxes starting from the date of purchase. You can use this deduction on your primary mortgage and any other real estate you own and pay property taxes on. 

Mortgage Interest:

Your lender will provide documentation come tax time that specifies the interest you paid in the previous year, which can be deducted from your taxes. This deduction applies to your primary home and a second home that is not rented out. 

Points: 

For any points paid towards your loan’s interest on your primary residence, you can deduct these on your taxes on the year they are paid. 

Energy Efficiency Credits: 

Every year, up to $1,200 can be claimed for: 

• Energy audits,

• Installing exterior doors,

• Exterior windows and skylights, 

• Central A/C units, 

• Electric panels,

• Natural gas, propane, and oil water heaters, 

• Furnaces or hot water boilers, and

• Heat pumps and biomass stoves, and boilers

You can also itemize the cost of parts and labor for installation: 

• solar hot water heaters,

• solar-electric panels,

• geothermal heat pumps,

• small wind turbines, and

• fuel cells

Renovations For Medical Care: 

Any home renovations completed for medical care can be itemized and deducted. Keep your receipts and invoices!

Home offices: 

If you work from home or run a small business from a home office, you can deduct utilities, interest, etc. You will be required to report the square footage of your home explicitly used for business. 

If you’re feeling overwhelmed by tax time regarding homeownership, don’t worry! Feel free to contact us today if you need a referral to a local tax expert! We can recommend some local professionals who can help you navigate and maximize your returns.

Feeling ready to become a homeowner so you can take advantage of these benefits?