4 Tax Benefits Homeowners Can Look Forward To
Owning your own home is not only an investment. It comes with a host of tax benefits and credits aimed at homeowners.
These tax perks can provide some much-needed breaks, deductions or credits you would not have access to otherwise. In the long run, these savings can be invaluable to your wallet and peace of mind.
Here are some tax benefits a new homeowner can look forward to:
Real Estate Taxes
Yes, your property taxes are deductible. You can check your IRS Form 1098 (sent by your lender) if you pay taxes through a lender escrow account, or your personal records if you pay them directly. The limit for property tax deductions is $10,000.
Mortgage Interest Deductions
In most cases, you can potentially deduct your mortgage’s interest from your taxes. However, the limits on how much you can deduct depend on the date of purchase for your home. To check the interest you paid on your mortgage in the prior year, see the 1098 form from your lender. If you cannot find the interest or the form, ask your lender or mortgage broker for a copy/show you where the interest is.
Home Office Deductions
Homeowners working from home can write off their home office costs – especially useful given current circumstances. That said, you will want to speak with your tax preparer before including this. The area you use must be exclusively for work and your primary place of business.
Installing energy-saving improvements can earn you a tax credit up to $500. You could also receive a credit up to 10% the cost of qualifying improvements (e.g., skylights, insulation systems, water heaters). This also applies to installing renewable energy sources like wind or solar systems.
Other tax benefits may be available to you depending on your situation and location, so talking to an accountant or tax professional can help you get the most out of your itemized deductions.