Tax Tips for Homeowners
Owning a home is a major investment. However, there are a number of tax programs, deductions, and incentives available for homeowners that can help make the cost of owning a home more affordable. Many homeowners miss deductions each year because they were not aware of all of the available savings opportunities; the following tips can help homeowners save money this tax season.
1. Stay organized
Most deductions for homeowners require detailed records or receipts for tax-related expenses. Saving receipts and statements throughout the year can help make things easier when tax time rolls around. To avoid having filing cabinets overflowing with paper, consider scanning and digitally saving documents.
Thinking about throwing away old documents? Plan on holding onto tax-related documents for several years; should you be audited by the IRS, they will typically ask to see three years of documentation to back up deductions.
2. Start itemizing
A major way homeowners miss out during tax season is by taking the standard deduction instead of itemizing. For tax year 2018, $24,000 is the standard deduction for married couples, $12,000 for individuals, $18,000 for head of household. If your itemized deductions are more than this amount, you could save even more on your taxes. Eligible deductions can include mortgage interest, property taxes, contributions to charity or religious organizations, and medical expenses not covered by insurance.
3. Track when you work from home
If you own a home-based business, you may be able to deduct some of the expenses associated with working from home. Office equipment, utilities, and even Internet costs may be deducted for a qualifying home office.
Employees may also qualify for this deduction if they meet specific criteria. The primary requirement is that working from home is for the employer’s convenience; taking advantage of a work-from-home program a few days per week is unlikely to qualify.
4. Make energy efficient updates
Adding green upgrades to your home can be rewarding at tax time. Energy efficient updates such as installing solar energy systems can qualify for a tax credit for 30% of the cost of installation. The tax credit won’t be around forever; the reimbursement amount for residential upgrades will decrease to 26% in 2020, then to 22% in 2021 before the program ends in 2022.
Have additional questions?
Have additional questions about what deductions you may quality for? Don’t hesitate to ask a real estate or tax professional for help. They will be able to guide homeowners when it comes to understanding the at-times complicated process of filing an itemized deduction.
by Author, Feb. 01, 2019