Homeowner Tax Write Offs Uncle Sam Wishes You’d Forget

Tax season is upon us, and while it may not be the most exciting time of year, it’s important to make sure you’re taking full advantage of the tax benefits available to homeowners. These deductions could significantly reduce your tax bill or increase your refund. Remember to discuss these with your tax advisor, as there may be additional benefits specific to your situation.

Here are some key tax breaks homeowners can take advantage of:

• Mortgage Interest Deduction: If your home was purchased before December 16, 2017, you can deduct mortgage interest on the first $1 million of mortgage debt. For mortgages taken after that date, it’s limited to $750,000. Discuss with your accountant whether itemizing or the standard deduction is more beneficial for you.
  
  
• Property Tax Deduction: You can fully deduct property taxes paid on real estate. If you purchased a home in 2024 and reimbursed the seller for prepaid taxes, include that amount in your deduction.
  
  
• Credit for Green Improvements: Beginning January 1^st 2023, homeowners may qualify for a tax credit up to $3200 by making certain home improvements that maximize energy efficiency (home energy audit, exterior doors, windows, certain heat sources and appliances)
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• Investment Property/Rental Property Deduction: The cost of maintaining and managing rental property, including mortgage interest, insurance, utilities, and management fees, is fully deductible.
  
  
• Home Office Deduction: If you use part of your home exclusively as your principal place of business, you may be eligible for a home office deduction. Consult with your accountant to ensure you meet the requirements to avoid audits.
  
  
• Tax-Free Rental Income: Rent out your home for 14 or fewer days in a year, and the rental income is tax-free.
  
  
• Capital Gains: If you sold your principal residence, you may exclude up to $250,000 in capital gains ($500,000 for married couples). Investment properties have more complex rules, but you may be eligible for a 1031 exchange to defer taxes. Let me know if you’d like more information on 1031 exchanges.

Be sure to consult with your accountant to maximize your tax benefits. If you need a referral to a trusted accountant, feel free to reach out to me.

Once you receive your refund, how do you plan to spend it? I’d love to hear your ideas!