While there are plenty of expenses that come along with owning a house, there are some tax benefits too. If you’re looking to get the most out of your home, here are five tax breaks for homeowners you want to stay on top and keep a record of.
Mortgage Interest Deduction
When you make your mortgage payments, you may have been surprised at how much of your money was going towards interest. The good news is that you may be able to deduct your home mortgage interest when you file your taxes. When you receive your Form 1098 at tax-time, you’ll find out how much mortgage interest you paid in box 1.
Property taxes can be a big chunk of your housing expenses, but you may be able to deduct them on your taxes.
If you have an “Impound/Escrow Account” your property taxes are included with your mortgage payment so the amount paid annually will be reflected on your Form 1098 Mortgage Interest statement. If they are not impounded keep record of what you paid to your county assessor. You can also look at your property tax bill for the year, which you may also be able to look at what you paid online.
Keep in mind that the new tax law changed how much property taxes can be deducted. Under the new tax law, the maximum amount of state and local property, income, and sales taxes that can be deducted is $10,000. In the past, these taxes have generally been fully tax deductible.
Private Mortgage Insurance Premiums
Private mortgage insurance is typically what you pay if you got a conventional home loan and put less than 20% down. It’s meant to protect the lender, but if you paid private mortgage insurance premiums, you can still get a win. You may be able to claim a deduction for Private Mortgage Insurance you paid when you file your taxes. You can find the amount paid on box 5 on your 1098 form.
Home Office Deduction
If you work from home, then you may be able to claim the home office deduction. There is a simplified home office deduction approved by the IRS that you can claim up to $1,500 which is the set dollar amount of $5 per square foot of your home used for your business up to 300 square feet. Another option is claiming the home office deduction based on a portion of your home expenses. These expenses might include mortgage, utilities, electricity, insurance, etc. based on the percentage of space used for your home office.
Just keep in mind that to claim this tax deduction, the IRS requires that this is dedicated space used exclusively for your business. It also must be the principal place of your business.
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