The tax benefit of owning a home-Most people are not aware of the available tax deductions. Check out the deductions you may be eligible for!
When you think of owning your home, freedom is the first thing that comes to mind. Freedom to paint the walls without asking the landlord. Freedom to own pets without permission. The list goes on and on with the list of changes you can make to your home without first getting approval or, worse, sinking your hard-earned money into someone else’s investment. However, there is another perk that many are not aware of – the tax benefit of owning a home in Florida. That’s right, owning a home can even help you with your taxes. Let’s take a look at how.
Deduct Mortgage Loan Interest Expenses
Homeowners are eligible to deduct interest expenses on a maximum of $750,000 of their mortgage on their income taxes. However, it is pertinent to note that choosing to do so means itemizing deductions in place of standard deductions. You will have to determine which route will be most advantageous.
You can also deduct mortgage loan interest expenses on second homes and other properties you own. The stipulation is that they cannot have been rented for more than 14 days out of the year.
When calculating capital gains, homeowners can exclude a maximum of $250,000 of their home’s appreciation if filing individually and up to $500,000 if married filing jointly.
To be eligible, you have to meet the following criteria:
- The property must have been your primary residence for at least two out of the previous five years.
- You have not deducted capital gains from the sale of another property in the previous two years.
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Property Tax Deduction
If you choose to itemize your deductions, you can deduct the taxes you paid at the closing time (if you bought your home in that tax year). You can also deduct property taxes paid for your primary residence and any other properties you own.
If you closed on your home within the tax year you are preparing for, the points you paid might be deductible as well as other closing costs. You may also be eligible if you refinanced your home. Keep in mind; the transaction must have been completed within the tax year.
Deduct Moving Costs for a New Job
If you moved at least 50 miles away from your previous home to take a new job, then you may be eligible to deduct associated moving costs.
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Unavoidable Loss of Property
Homeowners who have gone through an unexpected and avoidable tragic event within the tax year and experienced loss of property may be able to deduct a certain percentage of that loss. This includes natural disasters, fires, etc. The general rule of thumb is that if the damage incurred is more than 10% of your income; you can deduct the amount that insurance did not cover.
Solar Energy Tax Deduction
In an effort to promote energy efficiency and the use of renewable sources to power our lives, you can receive a tax deduction if you made solar improvements to your home. Eligible homeowners will receive a credit for a percentage of the total cost of the improvements.
The tax benefit of owning a home can be extremely beneficial on your income taxes. Always consult a tax professional if you are unsure which deductions you qualify for.
When it comes time to purchase a new home or sell your current one, trust the leading Lake Mary Realtor. Here at Gitta Sells, we work diligently to ensure a smooth process to get you into the home of your dreams. Contact us at firstname.lastname@example.org or 407-330-2181!
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