There are many different deductions you can have on your taxes thanks to being a homeowner, but you’ll want to be careful that you’re understanding them correctly. Here are some of the tax benefits of being a homeowner and things to watch out for with each one.
Benefit: Making energy-efficient upgrades can count as a tax deduction. Whether you get renewable energy sources or change out your windows, you could get a chunk of money or a percentage credited.
Watch out: Some upgrades don’t apply. Just because your new oven says it’s energy-efficient, doesn’t mean that it can count toward your tax deduction. Talk with your accountant to make sure that you’re correctly taking advantage of possible deductions.
Ready to buy a home so you can enjoy these tax deductions? Check out these East Valley homes for sale!
Private Mortgage Insurance (PMI)
Benefit: If you didn’t have 20% of a down payment, you’re likely paying PMI. You could get a tax break for paying this each month. Keep in mind that this may no longer be an option for 2017 taxes.
Watch out: Did you know there’s an income limit when it comes to PMI tax deductions? It only applies if you make less than $100,000 a year, and you can get partial deductions for making between $100,000 and $109,000. Make sure that you fall within this limit before you try and take this deduction into account.
Benefit: More and more people are working from home. Did you know that your office space and supplies can be tax deductible? You can get a deduction for each square foot of office space and for any expenses related.
Watch out: The requirements are very strict on this. The space must be used only for a home office, and must be where you complete most of your work. The deduction isn’t huge either, so keep this in mind.
Benefit: You can get a tax deduction for the property taxes that you pay. Whether you pay the taxes monthly or in a large check, you can claim whatever amount you paid in 2016.
Watch out: If your property taxes are part of the money you give your lender each month, it may not be the exact amount. The amount in the escrow account is just an estimate. Check your 1098 form your bank gives you to know the real amount.
Home Equity Line of Credit (HELOC)
Benefit: If you’ve been taking out a HELOC, the interest paid can be tax-deductible. Yay!
Watch out: If you use the loan money for anything other than home improvement, only the first $100,000 is deductible. If it’s used for home improvements it’s deductible up to $500,000 for a single person and $1 million for a married couple.
Being a homeowner has many benefits, especially when it comes to tax deductions, but you’ll want to make sure that you’re understanding them all correctly. Double-check everything with your accountant.
Are you ready to be a home owner so you can get these benefits for your 2017 taxes?
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If you want to learn about some financing options, or if you’re looking to get pre-qualified, contact Parker Turk at Sun American Mortgage Company: 602-616-3774.