Ready or not tax season has arrived and it’s time to get your paperwork in order. This tax season homeowners can take a sigh of relief, because owning a home can actually help minimize tax liability and return some extra cash to your wallets.
“Purchasing a home is undoubtedly an emotional decision, but it is also an investment and financial consideration should be taken,” said Fran Broude, president of Coldwell Banker Residential Brokerage.
“The tax benefits of owning a home versus renting can be a deciding factor for those on the fence and essential to your long term savings plan.”
While most people are familiar with the standard deductions, like mortgage interest, property taxes and premium mortgage insurance, there are many other ways to reap the benefits. To make sure every possible last dime is collected, we have provided a tax-break cheat sheet.
Energy Efficiency Pays Off – Take advantage of a tax credit that lets you offset what you owe the IRS dollar-for-dollar for up to 10 percent of the amount you spent on certain home energy-efficiency upgrades, from insulation to water heaters. Although the credit is capped at $500, the right improvement could lower your utility bills indefinitely.
Home Office Deduction –This is the first year for a more simplified option to claim this deduction. To qualify you must use your home office exclusively and on a regular basis, and allows you to claim $5 per square foot (up to 300 square feet, instead of having to compute the actual expenses of your home office using a 43-line form.
Home Improvements –Look ahead to future savings. While you can’t deduct the expenses until you sell your home, make sure to save all receipts for improvements made. Any costs from landscaping, to storm windows and fencing can be added to the purchase price of your home and will reduce any potential taxable gain that you may have from the sale of your home.
Moving Expenses –If you move more than 50 miles to a new full-time job in the same line of work, some of those moving expenses are deductible. For more information, see the IRS publication on moving expenses.
Taking the time to navigate through tax breaks that you may be eligible for as a homeowner can help you put some cash back in to the bank.
By Brooke Balco, Communications Specialist