Whether you own your own home, or are considering purchasing one in the future, knowing what kind of tax breaks home ownership allows for is key when filing your taxes. In a previous blog post, we explored some common tax write-offs to help you uncover deduction opportunities. This post will add to that list by including five home-related tax breaks that apply to homeowners and buyers.
5. First-Time Homebuyer
A few years ago, the first time homebuyer tax credit was a federal program where new homeowners could receive when filing their taxes. Now, however, no such nationwide program exists anymore. But, if you purchased your very first home, or purchased a home after three years of non-ownership in the last year, you are considered a “first-time homebuyer” and may qualify for various assistance programs within your state. A list for 2014 credits can be found at HomeOwnership.org.
6. Mortgage Interest
You know that pesky interest you pay on your mortgage each month? It’s deductible! Not only is the mortgage interest on your living space deductible, any mortgage interest paid on a second home is, as well.
7. Real Estate (Property) Taxes
Taxes that are paid directly to a tax authority or through an escrow account set up by your mortgage company may be deductible. As long as you own the property and only claim the amount you paid within a given tax year, you can take advantage of this federal tax deduction.
8. Energy-Efficient Home Improvements
Did you make energy-efficient updates to your home in 2014? Items such as doors, skylights, insulation, doors and other renovations may qualify for tax credits if they fall within certain federally approved categories and products.
Since this tax credit has been extended a few times already and it’s unsure of how much longer it may be around, if you are considering buying a new home in the future, consider looking into a home that was built with energy efficiency in mind, so any future updates won’t affect your pocketbook.
Going green can save you some green with certain tax write-offs!
9. Home Office Deduction
Is your home office decked out to the nines and your central place of business? You may qualify for the home office deduction! While we recommend asking your tax professional or reading the full explanation of home office tax deductions before claiming this write off, there are a few basic requirements you’ll need to meet:
- You must regularly use your home for conducting your business
- You must be able to show that your home is regularly used to conduct your business
If you have a dedicated space for your business, you may be able to use the entire room as a deduction; however, if you don’t have a dedicated space, you’ll have to determine a percentage of your home that is used for your business.
Employees who work out of their home, may also qualify for this deduction if they meet the above criteria, the use of the home office is in benefit to the employer, and no part of the home is rented to the employer to perform services.
Do you have a home office? Just because you work from home occasionally, doesn’t mean you can write off all of your expenses.
Are you ready to file your taxes this year? Pin the image below and print out this helpful notes section to remind you of which write offs you should ask your tax professional about – feel free to use the extra spaces as reminders for additional write offs you’ve seen that you may be eligible for!
*The information contained in this article is for general guidance only and does not constitute legal or tax advice. Contact a professional tax advisor concerning your specific tax circumstances and available deductions.