Owning a home is one of the biggest financial undertakings that you’ll ever have. There are some benefits to owning a home. Many of these benefits come each April when we file our taxes. There are a few very commonly overlooked tax breaks that homeowners have the chance to claim as deductions that you might not be taking advantage of.
There’s many different tax breaks that are available on a state-by-state basis based on green improvements that have been made to a home. Rates vary, but can save you a significant amount on your taxes. Aside from the money that you’re already saving on utility bills, the solar panels that you have installed, the low-flow toilet you put in, or the new efficient windows that you replaced can really save you some significant money. Check with your tax preparer for specific details on the savings that you can have from your state and even city or town based on these home improvements.
Mortgage Interest Tax Savings
This tax break is one of the biggest motivators for people to take the leap into homeownership. Since you have the ability to write off a significant amount of mortgage debt, in some cases 1 million dollars, it makes renting look less and less attractive. To take advantage of this deduction, however, you’ll need to itemize your deductions. This is not something many taxpayers actually do. If you want to take advantage of the mortgage interest deduction and the property tax deduction, you’ll need to start itemizing each and every tax deduction that you have.
For many people, itemizing the deductions won’t even add up. This is why many people avoid it altogether. For people in this situation, it may make more sense to take the standard deduction. If you are eligible to itemize, however, as a homeowner, you definitely should take advantage of these benefits.
Interest On Home Improvement Loans
If you have recently taken out a loan to do some major work around your home, the interest on this loan could be tax deductible. While many loans that may be greater than 100% of the property value aren’t eligible for tax deductions, up to $100,000 of your debt on a home improvement loan can be tax deductible.
Private Mortgage Insurance
You may be eligible to deduct your PMI premiums from your taxes. The amount of deduction that you can claim is dependent on your AGI (adjusted Gross Income) and may be less if that number is above $100,000.
If you’re a homeowner and feel that you haven’t been taking advantage of all of the tax breaks that are available to you, it’s important that you get more information on how to get these benefits.