Tax time is here again and as a homeowner, several deductible expenses can reduce your total taxable income. There are generally two types of deductions. “Standard deductions,” are based on a myriad of factors like filing status, age, and familial considerations to name a few. Itemized deductions include personal deductions, certain homeowner expenses, and charitable contributions. When filing your taxes, you can elect to take the standard or itemized deductions. Some deductions exclusive to homeowners are:
- Mortgage Interest
- Home equity loan interest
- Discount points
- Property taxes
- Mortgage insurance
- Necessary home improvements
- Home office cost
Property tax exemptions are typically provided for owners in the following situations:
- Homeowner Exemption
- Senior Citizen Exemption
- Senior Freeze Exemption
- Longtime Homeowner Exemption
- Home Improvement Exemption
- Returning Veterans’ Exemption
- Disabled Veterans’ Exemption
- Disabled Persons’ Exemption
For homeowners who itemize their taxes, the mortgage interest deduction is usually the largest tax deduction. A newer homeowner deduction is the Residential Energy Credit. This tax credit applies to homeowners who purchase qualifying equipment such as solar panels, geothermal systems, insulation, etc. Energy-efficient improvements installed post-January 1, 2023 may qualify for a tax credit of up to $3,200.
The best way to make sure you are taking advantage of all deductions allotted to a homeowner is to speak with a qualified tax specialist.
Sources: Rocket Mortgage, NAR, IRS.gov, AI
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