Did you know that there are many different tax benefits for homeowners? Next tax season, if you take the time to fill out a few more sections on your form, you can enjoy the tax breaks you get from owning a home. Let’s take a look at five of the biggest benefits for homeowners.
Loan Interest Payments are Tax Deductible:
For most homeowners, a fair portion of your house payments goes towards interest. This interest also happens to be tax deductible, as long as your home loan is for less than one million dollars. Interest on a home refinance or home equity loan is also tax deductible.
If you happen to be lucky enough to have a beautiful vacation home to spend each summer at, mortgage interest for your second property is also tax deductible. Even if you own a boat or RV with sleeping quarters, a kitchen, and a bathroom, a tax deduction can be made for those as well.
Mortgage Points are Tax Deductible:
When you take out a mortgage loan, your lender may offer you the option to add “points”. Each point is equal to 1% of the total loan amount and there are two kinds of points: discount points and origination points. Discount points are prepaid interest on the loan you received for your mortgage, while origination points are a fee charged by the lender that cover the cost of obtaining the loan. In most cases, both types of points are tax deductible. If you’re not sure if your points qualify, check the IRS site for more details.
Property Taxes are Tax Deductible:
If you itemize, your property taxes can be claimed as a deduction on the real estate taxes portion of your tax form. Since these payments are often quite large (and sometimes painful to make), that deduction can be a huge benefit. Be sure to keep good records of your payments to make the filing process easy.
Home Offices are Tax Deductible:
If you work from home, even part-time, you can often make deductions for home office costs. To qualify, your room needs to either be your principle point of business or you must see clients there regularly. There are several work-from-home deductions you may also qualify for. Check out this post from House Logic for more information.
Energy Efficient Appliances Provide Tax Credits:
Finally, you can receive tax credits by having energy efficient appliances through a tax program that encourages residents to take measures to conserve energy. Here’s more information on energy tax credits from Turbo Tax.
So there you have it! Take advantage of these tax benefits to get your best return yet next time you file.