There has been an ongoing debate since the housing market crashed on whether or not purchasing a home is a good investment. I believe owning a home is beneficial in many ways, especially when it comes to tax season. Many homeowners may not know that they can write certain things off on their taxes each year, and this causes them to leave money on the table after they file their taxes. By taking advantage of the following tax write-offs, you can assure that you are maximizing your tax return.
Mortgage and Property Tax
Most homeowners should know to deduct their mortgage interest each year, but there may be an instance where it slipped through the cracks or it is your first year filing your taxes as a homeowner. The longer you own your house, the better your savings will be on your tax return. Along with your mortgage interest, you should also be deducting your property taxes each year. A lot of the time, property taxes are built into a mortgage, but you can pay them in a lump sum at the start of the year if you wish. There’s a really useful property tax calculator online that can help you find out exactly what your property taxes are for the year if they are built into your mortgage.
Energy Efficient Upgrades
One thing that comes with home ownership is the responsibility of making your own home repairs and upgrades. When you are considering upgrading your home, you will want to at least consider taking the energy efficient route since you will be eligible for a tax break on certain upgrades. While upgrades with energy efficiency in mind may be a little more expensive up front, you will save in the long run by lowering your electric bill each month and receiving a sizeable refund each year. If you made any upgrades in 2016 involving the use of renewable resources such as solar power, fuel cells, wind power, or geothermal power, the Renewable Energy Efficiency Property Credit states you are entitled to a 30% credit.
Aging in Place
If you decide that the home you are in will become your forever home, you will eventually need to make upgrades in order to make your home more accessible as you age. These “aging in place” upgrades are all eligible for tax breaks thanks to the Senior Accessible Housing Act. By utilizing these tax breaks, you can create a safe living environment in your forever home without spending your life savings on the upgrades.
Now that the housing market is stabilized there is an influx of first time homebuyers who may not know what they can and cannot claim on their taxes. This list will ensure you you don’t miss anything on your taxes in the future.